Correlation Between Trematon Capital and Standard Bank

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

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

Diversification Opportunities for Trematon Capital and Standard Bank

0.1

Correlation Coefficient

Trematon Capital  Standard Bank

Average diversification

The 3 months correlation between Trematon and Standard is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Trematon Capital Investments 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 Trematon Capital 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 Trematon Capital Investments 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 Trematon Capital i.e., Trematon Capital and Standard Bank go up and down completely randomly.

Pair Corralation between Trematon Capital and Standard Bank

Assuming the 90 days trading horizon Trematon Capital Investments is expected to generate 3.62 times more return on investment than Standard Bank. However, Trematon Capital is 3.62 times more volatile than Standard Bank Group. It trades about 0.02 of its potential returns per unit of risk. Standard Bank Group is currently generating about 0.05 per unit of risk. If you would invest  23,600  in Trematon Capital Investments on October 22, 2024 and sell it today you would lose (200.00) from holding Trematon Capital Investments or give up 0.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Trematon Capital Investments  vs.  Standard Bank Group

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.

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.

Pair Trading with Trematon Capital and Standard Bank

The main advantage of trading using opposite Trematon Capital and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Trematon Capital 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 Trematon Capital Investments 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..