Correlation Between Standard Bank and Trematon Capital

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

Diversification Opportunities for Standard Bank and Trematon Capital

0.1

Correlation Coefficient

Standard Bank  Trematon Capital

Average diversification

The 3 months correlation between Standard and Trematon is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Trematon Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trematon Capital Inv 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 Trematon Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trematon Capital Inv has no effect on the direction of Standard Bank i.e., Standard Bank and Trematon Capital go up and down completely randomly.

Pair Corralation between Standard Bank and Trematon Capital

Assuming the 90 days trading horizon Standard Bank is expected to generate 2.66 times less return on investment than Trematon Capital. But when comparing it to its historical volatility, Standard Bank Group is 3.96 times less risky than Trematon Capital. It trades about 0.08 of its potential returns per unit of risk. Trematon Capital Investments is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  20,000  in Trematon Capital Investments on October 22, 2024 and sell it today you would earn a total of  3,400  from holding Trematon Capital Investments or generate 17.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

Standard Bank Group  vs.  Trematon Capital Investments

Standard Bank Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 3 (%) 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.

Trematon Capital Inv

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Trematon Capital Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Trematon Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Standard Bank and Trematon Capital

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

The idea behind Standard Bank Group and Trematon Capital Investments 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.