Correlation Between Standard Bank and Bidvest
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Bidvest 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 Bidvest 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 Bidvest Group, you can compare the effects of market volatilities on Standard Bank and Bidvest 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 Bidvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Bidvest.
Diversification Opportunities for Standard Bank and Bidvest
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Standard and Bidvest is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Bidvest Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bidvest Group 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 Bidvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bidvest Group has no effect on the direction of Standard Bank i.e., Standard Bank and Bidvest go up and down completely randomly.
Pair Corralation between Standard Bank and Bidvest
Assuming the 90 days trading horizon Standard Bank Group is expected to generate 1.41 times more return on investment than Bidvest. However, Standard Bank is 1.41 times more volatile than Bidvest Group. It trades about 0.06 of its potential returns per unit of risk. Bidvest Group is currently generating about -0.13 per unit of risk. If you would invest 920,000 in Standard Bank Group on September 5, 2024 and sell it today you would earn a total of 19,900 from holding Standard Bank Group or generate 2.16% 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. Bidvest Group
Performance |
| Timeline |
| Standard Bank Group |
| Bidvest Group |
Standard Bank and Bidvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Bidvest
The main advantage of trading using opposite Standard Bank and Bidvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Bidvest 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 Bidvest will offset losses from the drop in Bidvest's long position.| Standard Bank vs. Allied Electronics | Standard Bank vs. HomeChoice Investments | Standard Bank vs. Frontier Transport Holdings | Standard Bank vs. Safari Investments RSA |
| Bidvest vs. Harmony Gold Mining | Bidvest vs. Europa Metals | Bidvest vs. British American Tobacco | Bidvest vs. Afine 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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