Correlation Between Capitec Bank and AH Vest

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

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

Diversification Opportunities for Capitec Bank and AH Vest

0.71

Correlation Coefficient

Capitec Bank  AH Vest

Poor diversification

The 3 months correlation between Capitec and AHL is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and AH Vest Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AH Vest Limited and Capitec Bank 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 Capitec Bank Holdings are associated (or correlated) with AH Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AH Vest Limited has no effect on the direction of Capitec Bank i.e., Capitec Bank and AH Vest go up and down completely randomly.

Pair Corralation between Capitec Bank and AH Vest

If you would invest  1,300  in AH Vest Limited on September 24, 2024 and sell it today you would earn a total of  0.00  from holding AH Vest Limited or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Capitec Bank Holdings  vs.  AH Vest Limited

Capitec Bank Holdings

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Capitec Bank Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Capitec Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

AH Vest Limited

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AH Vest Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, AH Vest exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capitec Bank and AH Vest

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

The idea behind Capitec Bank Holdings and AH Vest Limited 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.