Correlation Between Standard Bank and Astoria Investments

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

Diversification Opportunities for Standard Bank and Astoria Investments

-0.45

Correlation Coefficient

Standard Bank  Astoria Investments

Very good diversification

The 3 months correlation between Standard and Astoria is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Standard Bank Group and Astoria Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Astoria Investments 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 Astoria Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Astoria Investments has no effect on the direction of Standard Bank i.e., Standard Bank and Astoria Investments go up and down completely randomly.

Pair Corralation between Standard Bank and Astoria Investments

Assuming the 90 days trading horizon Standard Bank Group is expected to generate 0.42 times more return on investment than Astoria Investments. However, Standard Bank Group is 2.41 times less risky than Astoria Investments. It trades about 0.09 of its potential returns per unit of risk. Astoria Investments is currently generating about 0.01 per unit of risk. If you would invest  871,886  in Standard Bank Group on September 3, 2024 and sell it today you would earn a total of  54,714  from holding Standard Bank Group or generate 6.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Standard Bank Group  vs.  Astoria Investments

Standard Bank Group

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Standard Bank Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Standard Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Astoria Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astoria Investments are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Astoria Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Standard Bank and Astoria Investments

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

The idea behind Standard Bank Group and Astoria 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.