Correlation Between Pepkor Holdings and Capitec Bank
Can any of the company-specific risk be diversified away by investing in both Pepkor Holdings 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 Pepkor Holdings and Capitec Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pepkor Holdings and Capitec Bank Holdings, you can compare the effects of market volatilities on Pepkor Holdings 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 Pepkor Holdings with a short position of Capitec Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pepkor Holdings and Capitec Bank.
Diversification Opportunities for Pepkor Holdings and Capitec Bank
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Pepkor and Capitec is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pepkor Holdings 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 Pepkor Holdings 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 Pepkor Holdings 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 Pepkor Holdings i.e., Pepkor Holdings and Capitec Bank go up and down completely randomly.
Pair Corralation between Pepkor Holdings and Capitec Bank
Assuming the 90 days trading horizon Pepkor Holdings is expected to generate 1.12 times more return on investment than Capitec Bank. However, Pepkor Holdings is 1.12 times more volatile than Capitec Bank Holdings. It trades about 0.2 of its potential returns per unit of risk. Capitec Bank Holdings is currently generating about 0.15 per unit of risk. If you would invest 176,500 in Pepkor Holdings on September 24, 2024 and sell it today you would earn a total of 121,300 from holding Pepkor Holdings or generate 68.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pepkor Holdings vs. Capitec Bank Holdings
Performance |
Timeline |
Pepkor Holdings |
Capitec Bank Holdings |
Pepkor Holdings and Capitec Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pepkor Holdings and Capitec Bank
The main advantage of trading using opposite Pepkor Holdings and Capitec Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pepkor Holdings 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.Pepkor Holdings vs. Prosus NV | Pepkor Holdings vs. Compagnie Financire Richemont | Pepkor Holdings vs. British American Tobacco | Pepkor Holdings vs. Glencore PLC |
Capitec Bank vs. Safari Investments RSA | Capitec Bank vs. Astral Foods | Capitec Bank vs. City Lodge Hotels | Capitec Bank vs. CA Sales Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
Bonds Directory Find actively traded corporate debentures issued by US companies |