Correlation Between Brimstone Investment and Capitec Bank

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

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

Diversification Opportunities for Brimstone Investment and Capitec Bank

-0.51

Correlation Coefficient

Brimstone Investment  Capitec Bank

Excellent diversification

The 3 months correlation between Brimstone and Capitec is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment and Capitec Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capitec Bank Holdings and Brimstone Investment 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 Brimstone Investment are associated (or correlated) with Capitec Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capitec Bank Holdings has no effect on the direction of Brimstone Investment i.e., Brimstone Investment and Capitec Bank go up and down completely randomly.

Pair Corralation between Brimstone Investment and Capitec Bank

Assuming the 90 days trading horizon Brimstone Investment is expected to under-perform the Capitec Bank. In addition to that, Brimstone Investment is 4.72 times more volatile than Capitec Bank Holdings. It trades about -0.02 of its total potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.19 per unit of volatility. If you would invest  29,635,700  in Capitec Bank Holdings on September 15, 2024 and sell it today you would earn a total of  3,653,400  from holding Capitec Bank Holdings or generate 12.33% return on investment over 90 days.

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

Brimstone Investment  vs.  Capitec Bank Holdings

Brimstone Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Capitec Bank Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitec Bank Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Capitec Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brimstone Investment and Capitec Bank

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

The idea behind Brimstone Investment and Capitec Bank Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.