Correlation Between STANDARD CHARTERED and ZAMBIA SUGAR
Can any of the company-specific risk be diversified away by investing in both STANDARD CHARTERED and ZAMBIA SUGAR 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 ZAMBIA SUGAR 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 ZAMBIA SUGAR PLC, you can compare the effects of market volatilities on STANDARD CHARTERED and ZAMBIA SUGAR 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 ZAMBIA SUGAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD CHARTERED and ZAMBIA SUGAR.
Diversification Opportunities for STANDARD CHARTERED and ZAMBIA SUGAR
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STANDARD and ZAMBIA is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD CHARTERED BANK and ZAMBIA SUGAR PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZAMBIA SUGAR PLC 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 ZAMBIA SUGAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZAMBIA SUGAR PLC has no effect on the direction of STANDARD CHARTERED i.e., STANDARD CHARTERED and ZAMBIA SUGAR go up and down completely randomly.
Pair Corralation between STANDARD CHARTERED and ZAMBIA SUGAR
Assuming the 90 days trading horizon STANDARD CHARTERED BANK is expected to under-perform the ZAMBIA SUGAR. But the stock apears to be less risky and, when comparing its historical volatility, STANDARD CHARTERED BANK is 1.43 times less risky than ZAMBIA SUGAR. The stock trades about -0.52 of its potential returns per unit of risk. The ZAMBIA SUGAR PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,500 in ZAMBIA SUGAR PLC on August 24, 2024 and sell it today you would earn a total of 104.00 from holding ZAMBIA SUGAR PLC or generate 2.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
STANDARD CHARTERED BANK vs. ZAMBIA SUGAR PLC
Performance |
| Timeline |
| STANDARD CHARTERED BANK |
| ZAMBIA SUGAR PLC |
STANDARD CHARTERED and ZAMBIA SUGAR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STANDARD CHARTERED and ZAMBIA SUGAR
The main advantage of trading using opposite STANDARD CHARTERED and ZAMBIA SUGAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STANDARD CHARTERED position performs unexpectedly, ZAMBIA SUGAR 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 ZAMBIA SUGAR will offset losses from the drop in ZAMBIA SUGAR's long position.| STANDARD CHARTERED vs. METAL FABRICATORS OF | STANDARD CHARTERED vs. AECI MINING EXPLOSIVES | STANDARD CHARTERED vs. ZAMBIA SUGAR PLC | STANDARD CHARTERED vs. BRITISH AMERICAN TOBACCO ZAMBIA |
| ZAMBIA SUGAR vs. STANDARD CHARTERED BANK | ZAMBIA SUGAR vs. METAL FABRICATORS OF | ZAMBIA SUGAR vs. AECI MINING EXPLOSIVES | ZAMBIA SUGAR vs. BRITISH AMERICAN TOBACCO ZAMBIA |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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