Correlation Between Compagnie Financire and Standard Bank

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Compagnie Financire 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 Compagnie Financire and Standard Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie Financire Richemont and Standard Bank Group, you can compare the effects of market volatilities on Compagnie Financire 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 Compagnie Financire with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie Financire and Standard Bank.

Diversification Opportunities for Compagnie Financire and Standard Bank

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Compagnie and Standard is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie Financire Richemont 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 Compagnie Financire 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 Compagnie Financire Richemont 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 Compagnie Financire i.e., Compagnie Financire and Standard Bank go up and down completely randomly.

Pair Corralation between Compagnie Financire and Standard Bank

Assuming the 90 days trading horizon Compagnie Financire Richemont is expected to generate 1.57 times more return on investment than Standard Bank. However, Compagnie Financire is 1.57 times more volatile than Standard Bank Group. It trades about 0.03 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.02 per unit of risk. If you would invest  24,210,000  in Compagnie Financire Richemont on October 11, 2024 and sell it today you would earn a total of  5,033,800  from holding Compagnie Financire Richemont or generate 20.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Compagnie Financire Richemont  vs.  Standard Bank Group

 Performance 
       Timeline  
Compagnie Financire 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Compagnie Financire Richemont are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Compagnie Financire may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Standard Bank Group 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 3 (%) 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.

Compagnie Financire and Standard Bank Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Compagnie Financire and Standard Bank

The main advantage of trading using opposite Compagnie Financire and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie Financire 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 Compagnie Financire Richemont 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

Other Complementary Tools

Analyst Advice
Analyst recommendations and target price estimates broken down by several categories
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Pattern Recognition
Use different Pattern Recognition models to time the market across multiple global exchanges
Fundamental Analysis
View fundamental data based on most recent published financial statements