Correlation Between Standard Bank and Compagnie Financire
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Compagnie Financire 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 Compagnie Financire 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 Compagnie Financire Richemont, you can compare the effects of market volatilities on Standard Bank and Compagnie Financire 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 Compagnie Financire. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Compagnie Financire.
Diversification Opportunities for Standard Bank and Compagnie Financire
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Standard and Compagnie is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Compagnie Financire Richemont in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie Financire 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 Compagnie Financire. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie Financire has no effect on the direction of Standard Bank i.e., Standard Bank and Compagnie Financire go up and down completely randomly.
Pair Corralation between Standard Bank and Compagnie Financire
Assuming the 90 days trading horizon Standard Bank is expected to generate 2.35 times less return on investment than Compagnie Financire. But when comparing it to its historical volatility, Standard Bank Group is 1.61 times less risky than Compagnie Financire. It trades about 0.02 of its potential returns per unit of risk. Compagnie Financire Richemont is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 21,642,300 in Compagnie Financire Richemont on August 29, 2024 and sell it today you would earn a total of 3,564,800 from holding Compagnie Financire Richemont or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. Compagnie Financire Richemont
Performance |
| Timeline |
| Standard Bank Group |
| Compagnie Financire |
Standard Bank and Compagnie Financire Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Compagnie Financire
The main advantage of trading using opposite Standard Bank and Compagnie Financire positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Compagnie Financire 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 Compagnie Financire will offset losses from the drop in Compagnie Financire's long position.| Standard Bank vs. Investec Limited NON | Standard Bank vs. Sasol Ltd Bee | Standard Bank vs. Centaur Bci Balanced | Standard Bank vs. Sabvest Capital |
| Compagnie Financire vs. Centaur Bci Balanced | Compagnie Financire vs. Sabvest Capital | Compagnie Financire vs. Growthpoint Properties | Compagnie Financire vs. Bowler Metcalf |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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