Correlation Between Brimstone Investment and Standard Bank

Can any of the company-specific risk be diversified away by investing in both Brimstone Investment 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 Brimstone Investment and Standard 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 Standard Bank Group, you can compare the effects of market volatilities on Brimstone Investment 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 Brimstone Investment with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brimstone Investment and Standard Bank.

Diversification Opportunities for Brimstone Investment and Standard Bank

-0.67

Correlation Coefficient

Brimstone Investment  Standard Bank

Excellent diversification

The 3 months correlation between Brimstone and Standard is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Brimstone Investment 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 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 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 Brimstone Investment i.e., Brimstone Investment and Standard Bank go up and down completely randomly.

Pair Corralation between Brimstone Investment and Standard Bank

Assuming the 90 days trading horizon Brimstone Investment is expected to under-perform the Standard Bank. But the stock apears to be less risky and, when comparing its historical volatility, Brimstone Investment is 37.92 times less risky than Standard Bank. The stock trades about -0.01 of its potential returns per unit of risk. The Standard Bank Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  66.00  in Standard Bank Group on October 7, 2024 and sell it today you would earn a total of  6,434  from holding Standard Bank Group or generate 9748.48% return on investment over 90 days.

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

Brimstone Investment  vs.  Standard Bank Group

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 latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Standard Bank Group

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 14 (%) 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 Brimstone Investment and Standard Bank

The main advantage of trading using opposite Brimstone Investment and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brimstone Investment 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 Brimstone Investment 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.