Correlation Between Truxton and Standard Bank

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

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

Diversification Opportunities for Truxton and Standard Bank

-0.48

Correlation Coefficient

Truxton  Standard Bank

Very good diversification

The 3 months correlation between Truxton and Standard is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Truxton 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 Truxton 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 Truxton 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 Truxton i.e., Truxton and Standard Bank go up and down completely randomly.

Pair Corralation between Truxton and Standard Bank

Given the investment horizon of 90 days Truxton is expected to generate 0.5 times more return on investment than Standard Bank. However, Truxton is 2.0 times less risky than Standard Bank. It trades about -0.06 of its potential returns per unit of risk. Standard Bank Group is currently generating about -0.04 per unit of risk. If you would invest  7,380  in Truxton on October 26, 2024 and sell it today you would lose (80.00) from holding Truxton or give up 1.08% of portfolio value over 90 days.

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

Truxton  vs.  Standard Bank Group

Truxton

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Truxton are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Truxton is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

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 weak performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Truxton and Standard Bank

The main advantage of trading using opposite Truxton and Standard Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truxton 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 Truxton 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.