Correlation Between Standard Bank and Datatec
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Datatec 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 Datatec 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 Datatec, you can compare the effects of market volatilities on Standard Bank and Datatec 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 Datatec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Datatec.
Diversification Opportunities for Standard Bank and Datatec
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Standard and Datatec is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Datatec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datatec 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 Datatec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datatec has no effect on the direction of Standard Bank i.e., Standard Bank and Datatec go up and down completely randomly.
Pair Corralation between Standard Bank and Datatec
Assuming the 90 days trading horizon Standard Bank Group is expected to generate 1.32 times more return on investment than Datatec. However, Standard Bank is 1.32 times more volatile than Datatec. It trades about 0.03 of its potential returns per unit of risk. Datatec is currently generating about -0.05 per unit of risk. If you would invest 937,000 in Standard Bank Group on August 28, 2024 and sell it today you would earn a total of 8,000 from holding Standard Bank Group or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. Datatec
Performance |
| Timeline |
| Standard Bank Group |
| Datatec |
Standard Bank and Datatec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Datatec
The main advantage of trading using opposite Standard Bank and Datatec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Datatec 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 Datatec will offset losses from the drop in Datatec'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 |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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