Correlation Between Standard Bank and Sygnia

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

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

Diversification Opportunities for Standard Bank and Sygnia

-0.33

Correlation Coefficient

Standard Bank  Sygnia

Very good diversification

The 3 months correlation between Standard and Sygnia is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Sygnia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sygnia and Standard 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 Standard Bank Group are associated (or correlated) with Sygnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sygnia has no effect on the direction of Standard Bank i.e., Standard Bank and Sygnia go up and down completely randomly.

Pair Corralation between Standard Bank and Sygnia

Assuming the 90 days trading horizon Standard Bank Group is expected to generate 0.76 times more return on investment than Sygnia. However, Standard Bank Group is 1.31 times less risky than Sygnia. It trades about 0.13 of its potential returns per unit of risk. Sygnia is currently generating about 0.05 per unit of risk. If you would invest  1,695,123  in Standard Bank Group on September 24, 2024 and sell it today you would earn a total of  559,277  from holding Standard Bank Group or generate 32.99% return on investment over 90 days.

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

Standard Bank Group  vs.  Sygnia

Standard Bank Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Standard Bank Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Sygnia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sygnia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sygnia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Standard Bank and Sygnia

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

The idea behind Standard Bank Group and Sygnia 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.