Correlation Between Standard Bank and Quantum Foods
Can any of the company-specific risk be diversified away by investing in both Standard Bank and Quantum Foods 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 Quantum Foods 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 Quantum Foods Holdings, you can compare the effects of market volatilities on Standard Bank and Quantum Foods 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 Quantum Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard Bank and Quantum Foods.
Diversification Opportunities for Standard Bank and Quantum Foods
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Standard and Quantum is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Quantum Foods Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum Foods 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 Quantum Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum Foods Holdings has no effect on the direction of Standard Bank i.e., Standard Bank and Quantum Foods go up and down completely randomly.
Pair Corralation between Standard Bank and Quantum Foods
Assuming the 90 days trading horizon Standard Bank Group is expected to generate 0.1 times more return on investment than Quantum Foods. However, Standard Bank Group is 9.68 times less risky than Quantum Foods. It trades about -0.06 of its potential returns per unit of risk. Quantum Foods Holdings is currently generating about -0.14 per unit of risk. If you would invest 942,000 in Standard Bank Group on November 9, 2024 and sell it today you would lose (9,500) from holding Standard Bank Group or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Bank Group vs. Quantum Foods Holdings
Performance |
| Timeline |
| Standard Bank Group |
| Quantum Foods Holdings |
Standard Bank and Quantum Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard Bank and Quantum Foods
The main advantage of trading using opposite Standard Bank and Quantum Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard Bank position performs unexpectedly, Quantum Foods 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 Quantum Foods will offset losses from the drop in Quantum Foods' long position.| Standard Bank vs. City Lodge Hotels | Standard Bank vs. Master Drilling Group | Standard Bank vs. Copper 360 | Standard Bank vs. Blue Label Telecoms |
| Quantum Foods vs. RCL Foods | Quantum Foods vs. CA Sales Holdings | Quantum Foods vs. Blue Label Telecoms | Quantum Foods vs. ABSA Bank Limited |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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