Correlation Between STANDARD CHARTERED and MTN GHANA

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

By analyzing existing cross correlation between STANDARD CHARTERED BANK and MTN GHANA LTD, you can compare the effects of market volatilities on STANDARD CHARTERED and MTN GHANA 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 CHARTERED with a short position of MTN GHANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of STANDARD CHARTERED and MTN GHANA.

Diversification Opportunities for STANDARD CHARTERED and MTN GHANA

0.5

Correlation Coefficient

STANDARD CHARTERED  MTN GHANA

Very weak diversification

The 3 months correlation between STANDARD and MTN is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding STANDARD CHARTERED BANK and MTN GHANA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN GHANA LTD and STANDARD CHARTERED 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 CHARTERED BANK are associated (or correlated) with MTN GHANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN GHANA LTD has no effect on the direction of STANDARD CHARTERED i.e., STANDARD CHARTERED and MTN GHANA go up and down completely randomly.

Pair Corralation between STANDARD CHARTERED and MTN GHANA

Assuming the 90 days trading horizon STANDARD CHARTERED BANK is expected to generate 1.13 times more return on investment than MTN GHANA. However, STANDARD CHARTERED is 1.13 times more volatile than MTN GHANA LTD. It trades about 0.16 of its potential returns per unit of risk. MTN GHANA LTD is currently generating about 0.1 per unit of risk. If you would invest  2,010  in STANDARD CHARTERED BANK on September 12, 2024 and sell it today you would earn a total of  290.00  from holding STANDARD CHARTERED BANK or generate 14.43% return on investment over 90 days.

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

STANDARD CHARTERED BANK  vs.  MTN GHANA LTD

STANDARD CHARTERED BANK

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in STANDARD CHARTERED BANK are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, STANDARD CHARTERED exhibited solid returns over the last few months and may actually be approaching a breakup point.

MTN GHANA LTD

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MTN GHANA LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, MTN GHANA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with STANDARD CHARTERED and MTN GHANA

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

The idea behind STANDARD CHARTERED BANK and MTN GHANA LTD 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.