Correlation Between Standard Bank and Tri County

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

Diversification Opportunities for Standard Bank and Tri County

-0.89

Correlation Coefficient

Standard Bank  Tri County

Pay attention - limited upside

The 3 months correlation between Standard and Tri is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Tri County Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri County Financial 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 Tri County. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri County Financial has no effect on the direction of Standard Bank i.e., Standard Bank and Tri County go up and down completely randomly.

Pair Corralation between Standard Bank and Tri County

Assuming the 90 days horizon Standard Bank Group is expected to under-perform the Tri County. In addition to that, Standard Bank is 1.92 times more volatile than Tri County Financial Group. It trades about -0.41 of its total potential returns per unit of risk. Tri County Financial Group is currently generating about 0.26 per unit of volatility. If you would invest  4,390  in Tri County Financial Group on October 10, 2024 and sell it today you would earn a total of  125.00  from holding Tri County Financial Group or generate 2.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	90.0%
Values	Daily Returns

Standard Bank Group  vs.  Tri County Financial Group

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 weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tri County Financial

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Tri County Financial Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical and fundamental indicators, Tri County is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Standard Bank and Tri County

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

The idea behind Standard Bank Group and Tri County Financial 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.