Correlation Between STANDARD CHARTERED and CEC AFRICA
Can any of the company-specific risk be diversified away by investing in both STANDARD CHARTERED and CEC AFRICA 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 CEC AFRICA 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 CEC AFRICA INVESTMENTS, you can compare the effects of market volatilities on STANDARD CHARTERED and CEC AFRICA 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 CEC AFRICA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD CHARTERED and CEC AFRICA.
Diversification Opportunities for STANDARD CHARTERED and CEC AFRICA
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between STANDARD and CEC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD CHARTERED BANK and CEC AFRICA INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEC AFRICA INVESTMENTS 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 CEC AFRICA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEC AFRICA INVESTMENTS has no effect on the direction of STANDARD CHARTERED i.e., STANDARD CHARTERED and CEC AFRICA go up and down completely randomly.
Pair Corralation between STANDARD CHARTERED and CEC AFRICA
Assuming the 90 days trading horizon STANDARD CHARTERED is expected to generate 1.18 times less return on investment than CEC AFRICA. In addition to that, STANDARD CHARTERED is 6.38 times more volatile than CEC AFRICA INVESTMENTS. It trades about 0.01 of its total potential returns per unit of risk. CEC AFRICA INVESTMENTS is currently generating about 0.11 per unit of volatility. If you would invest 60.00 in CEC AFRICA INVESTMENTS on September 2, 2024 and sell it today you would earn a total of 4.00 from holding CEC AFRICA INVESTMENTS or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
STANDARD CHARTERED BANK vs. CEC AFRICA INVESTMENTS
Performance |
| Timeline |
| STANDARD CHARTERED BANK |
| CEC AFRICA INVESTMENTS |
STANDARD CHARTERED and CEC AFRICA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STANDARD CHARTERED and CEC AFRICA
The main advantage of trading using opposite STANDARD CHARTERED and CEC AFRICA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STANDARD CHARTERED position performs unexpectedly, CEC AFRICA 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 CEC AFRICA will offset losses from the drop in CEC AFRICA's long position.| STANDARD CHARTERED vs. AECI MINING EXPLOSIVES | STANDARD CHARTERED vs. BRITISH AMERICAN TOBACCO ZAMBIA | STANDARD CHARTERED vs. AIRTEL NETWORKS ZAMBIA | STANDARD CHARTERED vs. NATIONAL BREWERIES PLC |
| CEC AFRICA vs. AECI MINING EXPLOSIVES | CEC AFRICA vs. BRITISH AMERICAN TOBACCO ZAMBIA | CEC AFRICA vs. AIRTEL NETWORKS ZAMBIA | CEC AFRICA vs. NATIONAL BREWERIES PLC |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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