Correlation Between Standard Bank and Kap Industrial
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Kap Industrial 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 Kap Industrial 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 Kap Industrial Holdings, you can compare the effects of market volatilities on Standard Bank and Kap Industrial 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 Kap Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Kap Industrial.
Diversification Opportunities for Standard Bank and Kap Industrial
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Standard and Kap is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Kap Industrial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kap Industrial Holdings 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 Kap Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kap Industrial Holdings has no effect on the direction of Standard Bank i.e., Standard Bank and Kap Industrial go up and down completely randomly.
Pair Corralation between Standard Bank and Kap Industrial
Assuming the 90 days trading horizon Standard Bank is expected to generate 3.85 times less return on investment than Kap Industrial. But when comparing it to its historical volatility, Standard Bank Group is 2.21 times less risky than Kap Industrial. It trades about 0.04 of its potential returns per unit of risk. Kap Industrial Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 24,400 in Kap Industrial Holdings on September 2, 2024 and sell it today you would earn a total of 8,600 from holding Kap Industrial Holdings or generate 35.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. Kap Industrial Holdings
Performance |
| Timeline |
| Standard Bank Group |
| Kap Industrial Holdings |
Standard Bank and Kap Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Kap Industrial
The main advantage of trading using opposite Standard Bank and Kap Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Kap Industrial 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 Kap Industrial will offset losses from the drop in Kap Industrial's long position.| Standard Bank vs. Astoria Investments | Standard Bank vs. Capitec Bank Holdings | Standard Bank vs. Harmony Gold Mining | Standard Bank vs. Deneb Investments |
| Kap Industrial vs. Deneb Investments | Kap Industrial vs. Centaur Bci Balanced | Kap Industrial vs. Sabvest Capital | Kap Industrial vs. AfricaRhodium ETF |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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