Correlation Between STANBIC BANK and KCB GROUP
Can any of the company-specific risk be diversified away by investing in both STANBIC BANK and KCB GROUP 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 STANBIC BANK and KCB GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STANBIC BANK HOLDINGS and KCB GROUP LTD, you can compare the effects of market volatilities on STANBIC BANK and KCB GROUP 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 STANBIC BANK with a short position of KCB GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANBIC BANK and KCB GROUP.
Diversification Opportunities for STANBIC BANK and KCB GROUP
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between STANBIC and KCB is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding STANBIC BANK HOLDINGS and KCB GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCB GROUP LTD and STANBIC 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 STANBIC BANK HOLDINGS are associated (or correlated) with KCB GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCB GROUP LTD has no effect on the direction of STANBIC BANK i.e., STANBIC BANK and KCB GROUP go up and down completely randomly.
Pair Corralation between STANBIC BANK and KCB GROUP
Assuming the 90 days trading horizon STANBIC BANK HOLDINGS is expected to under-perform the KCB GROUP. But the stock apears to be less risky and, when comparing its historical volatility, STANBIC BANK HOLDINGS is 1.33 times less risky than KCB GROUP. The stock trades about -0.34 of its potential returns per unit of risk. The KCB GROUP LTD is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 106,680 in KCB GROUP LTD on August 30, 2024 and sell it today you would earn a total of 5,354 from holding KCB GROUP LTD or generate 5.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
STANBIC BANK HOLDINGS vs. KCB GROUP LTD
Performance |
| Timeline |
| STANBIC BANK HOLDINGS |
| KCB GROUP LTD |
STANBIC BANK and KCB GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STANBIC BANK and KCB GROUP
The main advantage of trading using opposite STANBIC BANK and KCB GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STANBIC BANK position performs unexpectedly, KCB GROUP 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 KCB GROUP will offset losses from the drop in KCB GROUP's long position.| STANBIC BANK vs. CENTUM INVESTMENT PANY | STANBIC BANK vs. BRITISH AMERICAN TOBACCO | STANBIC BANK vs. EAST AFRICAN BREWERIES | STANBIC BANK vs. QUALITY CHEMICAL INDUSTRIES |
| KCB GROUP vs. BRITISH AMERICAN TOBACCO | KCB GROUP vs. BANK OF BARODA | KCB GROUP vs. MTN UGANDA LIMITED | KCB GROUP vs. JUBILEE HOLDINGS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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