Correlation Between Safari Investments and Standard Bank

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

By analyzing existing cross correlation between Safari Investments RSA and Standard Bank Group, you can compare the effects of market volatilities on Safari Investments 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 Safari Investments with a short position of Standard Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safari Investments and Standard Bank.

Diversification Opportunities for Safari Investments and Standard Bank

0.14

Correlation Coefficient

Safari Investments  Standard Bank

Average diversification

The 3 months correlation between Safari and Standard is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Safari Investments RSA 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 Safari Investments 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 Safari Investments RSA 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 Safari Investments i.e., Safari Investments and Standard Bank go up and down completely randomly.

Pair Corralation between Safari Investments and Standard Bank

If you would invest  63,000  in Safari Investments RSA on October 9, 2024 and sell it today you would earn a total of  4,500  from holding Safari Investments RSA or generate 7.14% return on investment over 90 days.

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

Safari Investments RSA  vs.  Standard Bank Group

Safari Investments RSA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Safari Investments RSA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Safari Investments exhibited solid returns over the last few months and may actually be approaching a breakup point.

Standard Bank Group

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 10 (%) 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 Safari Investments and Standard Bank

The main advantage of trading using opposite Safari Investments and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safari Investments 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 Safari Investments RSA 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.