Correlation Between STANDARD CHARTERED and MTN GHANA
Can any of the company-specific risk be diversified away by investing in both STANDARD CHARTERED and MTN GHANA 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 CHARTERED and MTN GHANA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STANDARD CHARTERED BANK and MTN GHANA LTD, you can compare the effects of market volatilities on STANDARD CHARTERED and MTN GHANA 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 CHARTERED with a short position of MTN GHANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD CHARTERED and MTN GHANA.
Diversification Opportunities for STANDARD CHARTERED and MTN GHANA
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STANDARD and MTN is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD CHARTERED BANK and MTN GHANA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN GHANA LTD and STANDARD CHARTERED 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 CHARTERED BANK are associated (or correlated) with MTN GHANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN GHANA LTD has no effect on the direction of STANDARD CHARTERED i.e., STANDARD CHARTERED and MTN GHANA go up and down completely randomly.
Pair Corralation between STANDARD CHARTERED and MTN GHANA
Assuming the 90 days trading horizon STANDARD CHARTERED BANK is expected to generate 1.14 times more return on investment than MTN GHANA. However, STANDARD CHARTERED is 1.14 times more volatile than MTN GHANA LTD. It trades about 0.16 of its potential returns per unit of risk. MTN GHANA LTD is currently generating about 0.11 per unit of risk. If you would invest 2,010 in STANDARD CHARTERED BANK on September 2, 2024 and sell it today you would earn a total of 290.00 from holding STANDARD CHARTERED BANK or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
STANDARD CHARTERED BANK vs. MTN GHANA LTD
Performance |
| Timeline |
| STANDARD CHARTERED BANK |
| MTN GHANA LTD |
STANDARD CHARTERED and MTN GHANA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STANDARD CHARTERED and MTN GHANA
The main advantage of trading using opposite STANDARD CHARTERED and MTN GHANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STANDARD CHARTERED position performs unexpectedly, MTN GHANA 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 MTN GHANA will offset losses from the drop in MTN GHANA's long position.The idea behind STANDARD CHARTERED BANK and MTN GHANA LTD pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |