Correlation Between PT Bank and Standard Bank
Can any of the company-specific risk be diversified away by investing in both PT Bank and Standard 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 PT Bank and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PT Bank Central and Standard Bank Group, you can compare the effects of market volatilities on PT Bank and Standard 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 PT Bank with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of PT Bank and Standard Bank.
Diversification Opportunities for PT Bank and Standard Bank
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between PBCRF and Standard is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding PT Bank Central and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group and PT Bank 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 PT Bank Central are associated (or correlated) with Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of PT Bank i.e., PT Bank and Standard Bank go up and down completely randomly.
Pair Corralation between PT Bank and Standard Bank
Assuming the 90 days horizon PT Bank Central is expected to generate 3.5 times more return on investment than Standard Bank. However, PT Bank is 3.5 times more volatile than Standard Bank Group. It trades about 0.0 of its potential returns per unit of risk. Standard Bank Group is currently generating about -0.06 per unit of risk. If you would invest 70.00 in PT Bank Central on August 29, 2024 and sell it today you would lose (2.00) from holding PT Bank Central or give up 2.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PT Bank Central vs. Standard Bank Group
Performance |
| Timeline |
| PT Bank Central |
| Standard Bank Group |
PT Bank and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PT Bank and Standard Bank
The main advantage of trading using opposite PT Bank and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PT Bank position performs unexpectedly, Standard 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 Standard Bank will offset losses from the drop in Standard Bank's long position.The idea behind PT Bank Central and Standard Bank Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Standard Bank vs. Bank Central Asia | Standard Bank vs. Nedbank Group | Standard Bank vs. Kasikornbank Public Co | Standard Bank vs. KBC Groep NV |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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