Correlation Between Bank Central and Standard Bank
Can any of the company-specific risk be diversified away by investing in both Bank Central 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 Bank Central and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank Central Asia and Standard Bank Group, you can compare the effects of market volatilities on Bank Central 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 Bank Central with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank Central and Standard Bank.
Diversification Opportunities for Bank Central and Standard Bank
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bank and Standard is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bank Central Asia 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 Bank Central 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 Bank Central Asia 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 Bank Central i.e., Bank Central and Standard Bank go up and down completely randomly.
Pair Corralation between Bank Central and Standard Bank
Assuming the 90 days horizon Bank Central Asia is expected to under-perform the Standard Bank. In addition to that, Bank Central is 1.21 times more volatile than Standard Bank Group. It trades about -0.1 of its total potential returns per unit of risk. Standard Bank Group is currently generating about 0.02 per unit of volatility. If you would invest 1,200 in Standard Bank Group on December 11, 2024 and sell it today you would earn a total of 6.00 from holding Standard Bank Group or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bank Central Asia vs. Standard Bank Group
Performance |
| Timeline |
| Bank Central Asia |
| Standard Bank Group |
Bank Central and Standard Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank Central and Standard Bank
The main advantage of trading using opposite Bank Central and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank Central 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.| Bank Central vs. Nedbank Group | Bank Central vs. Standard Bank Group | Bank Central vs. Kasikornbank Public Co | Bank Central vs. KBC Groep NV |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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