Correlation Between Capitec Bank and Pick N

Can any of the company-specific risk be diversified away by investing in both Capitec Bank and Pick N 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 Pick N 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 Pick N Pay, you can compare the effects of market volatilities on Capitec Bank and Pick N 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 Pick N. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitec Bank and Pick N.

Diversification Opportunities for Capitec Bank and Pick N

-0.31

Correlation Coefficient

Capitec Bank  Pick N

Very good diversification

The 3 months correlation between Capitec and Pick is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Capitec Bank Holdings and Pick N Pay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pick N Pay 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 Pick N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pick N Pay has no effect on the direction of Capitec Bank i.e., Capitec Bank and Pick N go up and down completely randomly.

Pair Corralation between Capitec Bank and Pick N

Assuming the 90 days trading horizon Capitec Bank Holdings is expected to generate 0.59 times more return on investment than Pick N. However, Capitec Bank Holdings is 1.7 times less risky than Pick N. It trades about 0.07 of its potential returns per unit of risk. Pick N Pay is currently generating about -0.02 per unit of risk. If you would invest  17,347,800  in Capitec Bank Holdings on October 23, 2024 and sell it today you would earn a total of  12,781,900  from holding Capitec Bank Holdings or generate 73.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Capitec Bank Holdings  vs.  Pick N Pay

Capitec Bank Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pick N Pay

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pick N Pay 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, Pick N exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capitec Bank and Pick N

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

The idea behind Capitec Bank Holdings and Pick N Pay 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.