Correlation Between Kap Industrial and Capitec Bank
Can any of the company-specific risk be diversified away by investing in both Kap Industrial and Capitec Bank at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kap Industrial and Capitec Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kap Industrial Holdings and Capitec Bank Holdings, you can compare the effects of market volatilities on Kap Industrial and Capitec Bank and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kap Industrial with a short position of Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kap Industrial and Capitec Bank.
Diversification Opportunities for Kap Industrial and Capitec Bank
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Kap and Capitec is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Kap Industrial Holdings and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank Holdings and Kap Industrial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kap Industrial Holdings are associated (or correlated) with Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of Kap Industrial i.e., Kap Industrial and Capitec Bank go up and down completely randomly.
Pair Corralation between Kap Industrial and Capitec Bank
Assuming the 90 days trading horizon Kap Industrial Holdings is expected to under-perform the Capitec Bank. In addition to that, Kap Industrial is 1.88 times more volatile than Capitec Bank Holdings. It trades about -0.22 of its total potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.22 per unit of volatility. If you would invest 31,815,400 in Capitec Bank Holdings on August 28, 2024 and sell it today you would earn a total of 1,456,800 from holding Capitec Bank Holdings or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kap Industrial Holdings vs. Capitec Bank Holdings
Performance |
| Timeline |
| Kap Industrial Holdings |
| Capitec Bank Holdings |
Kap Industrial and Capitec Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kap Industrial and Capitec Bank
The main advantage of trading using opposite Kap Industrial and Capitec Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kap Industrial position performs unexpectedly, Capitec Bank can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Capitec Bank will offset losses from the drop in Capitec Bank's long position.| Kap Industrial vs. Deneb Investments | Kap Industrial vs. Frontier Transport Holdings | Kap Industrial vs. African Media Entertainment | Kap Industrial vs. HomeChoice Investments |
| Capitec Bank vs. Frontier Transport Holdings | Capitec Bank vs. E Media Holdings | Capitec Bank vs. ABSA Bank Limited | Capitec Bank vs. eMedia Holdings Limited |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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