Correlation Between Standard Bank and AfroCentric Investment
Can any of the company-specific risk be diversified away by investing in both Standard Bank and AfroCentric Investment 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 Standard Bank and AfroCentric Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Bank Group and AfroCentric Investment Corp, you can compare the effects of market volatilities on Standard Bank and AfroCentric Investment 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 Standard Bank with a short position of AfroCentric Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and AfroCentric Investment.
Diversification Opportunities for Standard Bank and AfroCentric Investment
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Standard and AfroCentric is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and AfroCentric Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfroCentric Investment and Standard 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 Standard Bank Group are associated (or correlated) with AfroCentric Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfroCentric Investment has no effect on the direction of Standard Bank i.e., Standard Bank and AfroCentric Investment go up and down completely randomly.
Pair Corralation between Standard Bank and AfroCentric Investment
Assuming the 90 days trading horizon Standard Bank Group is expected to generate 0.17 times more return on investment than AfroCentric Investment. However, Standard Bank Group is 5.73 times less risky than AfroCentric Investment. It trades about -0.19 of its potential returns per unit of risk. AfroCentric Investment Corp is currently generating about -0.13 per unit of risk. If you would invest 2,405,700 in Standard Bank Group on September 12, 2024 and sell it today you would lose (110,700) from holding Standard Bank Group or give up 4.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. AfroCentric Investment Corp
Performance |
| Timeline |
| Standard Bank Group |
| AfroCentric Investment |
Standard Bank and AfroCentric Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and AfroCentric Investment
The main advantage of trading using opposite Standard Bank and AfroCentric Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, AfroCentric Investment 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 AfroCentric Investment will offset losses from the drop in AfroCentric Investment's long position.| Standard Bank vs. eMedia Holdings Limited | Standard Bank vs. Astral Foods | Standard Bank vs. HomeChoice Investments | Standard Bank vs. E Media Holdings |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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