Correlation Between African Media and Standard Bank

Can any of the company-specific risk be diversified away by investing in both African Media and Standard Bank 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 African Media and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between African Media Entertainment and Standard Bank Group, you can compare the effects of market volatilities on African Media and Standard Bank 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 African Media with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of African Media and Standard Bank.

Diversification Opportunities for African Media and Standard Bank

-0.01

Correlation Coefficient

African Media  Standard Bank

Good diversification

The 3 months correlation between African and Standard is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding African Media Entertainment and Standard Bank Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Bank Group and African Media 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 African Media Entertainment are associated (or correlated) with Standard Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Bank Group has no effect on the direction of African Media i.e., African Media and Standard Bank go up and down completely randomly.

Pair Corralation between African Media and Standard Bank

If you would invest  6,500  in Standard Bank Group on October 23, 2024 and sell it today you would earn a total of  0.00  from holding Standard Bank Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

African Media Entertainment  vs.  Standard Bank Group

African Media Entert

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days African Media Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, African Media is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Standard Bank Group

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Standard Bank is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with African Media and Standard Bank

The main advantage of trading using opposite African Media and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if African Media position performs unexpectedly, Standard Bank 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 Standard Bank will offset losses from the drop in Standard Bank's long position.

The idea behind African Media Entertainment and Standard Bank Group 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.