Correlation Between Boxer Retail and Standard Bank

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

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

Diversification Opportunities for Boxer Retail and Standard Bank

0.06

Correlation Coefficient

Boxer Retail  Standard Bank

Significant diversification

The 3 months correlation between Boxer and Standard is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Boxer Retail 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 Boxer Retail 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 Boxer Retail 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 Boxer Retail i.e., Boxer Retail and Standard Bank go up and down completely randomly.

Pair Corralation between Boxer Retail and Standard Bank

Assuming the 90 days trading horizon Boxer Retail is expected to generate 5.31 times less return on investment than Standard Bank. In addition to that, Boxer Retail is 1.48 times more volatile than Standard Bank Group. It trades about 0.03 of its total potential returns per unit of risk. Standard Bank Group is currently generating about 0.21 per unit of volatility. If you would invest  907,000  in Standard Bank Group on September 29, 2024 and sell it today you would earn a total of  43,000  from holding Standard Bank Group or generate 4.74% return on investment over 90 days.

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

Boxer Retail  vs.  Standard Bank Group

Boxer Retail

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Boxer Retail are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Boxer Retail exhibited solid returns over the last few months and may actually be approaching a breakup point.

Standard Bank Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 4 (%) 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 Boxer Retail and Standard Bank

The main advantage of trading using opposite Boxer Retail and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Boxer Retail 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 Boxer Retail 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.