Correlation Between Standard Bank and African Media
Can any of the company-specific risk be diversified away by investing in both Standard Bank and African Media 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 African Media 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 African Media Entertainment, you can compare the effects of market volatilities on Standard Bank and African Media 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 African Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and African Media.
Diversification Opportunities for Standard Bank and African Media
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Standard and African is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and African Media Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Media Entert 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 African Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Media Entert has no effect on the direction of Standard Bank i.e., Standard Bank and African Media go up and down completely randomly.
Pair Corralation between Standard Bank and African Media
Assuming the 90 days trading horizon Standard Bank Group is expected to generate 0.39 times more return on investment than African Media. However, Standard Bank Group is 2.59 times less risky than African Media. It trades about 0.08 of its potential returns per unit of risk. African Media Entertainment is currently generating about -0.02 per unit of risk. If you would invest 856,674 in Standard Bank Group on August 31, 2024 and sell it today you would earn a total of 50,326 from holding Standard Bank Group or generate 5.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. African Media Entertainment
Performance |
| Timeline |
| Standard Bank Group |
| African Media Entert |
Standard Bank and African Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and African Media
The main advantage of trading using opposite Standard Bank and African Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, African Media 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 African Media will offset losses from the drop in African Media's long position.| Standard Bank vs. Zeder Investments | Standard Bank vs. Capitec Bank Holdings | Standard Bank vs. Afine Investments | Standard Bank vs. Brimstone Investment |
| African Media vs. Advtech | African Media vs. Trematon Capital Investments | African Media vs. Astral Foods | African Media vs. HomeChoice Investments |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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