Correlation Between AfroCentric Investment and MTN
Can any of the company-specific risk be diversified away by investing in both AfroCentric Investment and MTN 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 AfroCentric Investment and MTN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AfroCentric Investment Corp and MTN Group, you can compare the effects of market volatilities on AfroCentric Investment and MTN 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 AfroCentric Investment with a short position of MTN. Check out your portfolio center. Please also check ongoing floating volatility patterns of AfroCentric Investment and MTN.
Diversification Opportunities for AfroCentric Investment and MTN
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AfroCentric and MTN is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding AfroCentric Investment Corp and MTN Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group and AfroCentric Investment 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 AfroCentric Investment Corp are associated (or correlated) with MTN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of AfroCentric Investment i.e., AfroCentric Investment and MTN go up and down completely randomly.
Pair Corralation between AfroCentric Investment and MTN
Assuming the 90 days trading horizon AfroCentric Investment Corp is expected to under-perform the MTN. In addition to that, AfroCentric Investment is 4.3 times more volatile than MTN Group. It trades about -0.21 of its total potential returns per unit of risk. MTN Group is currently generating about 0.07 per unit of volatility. If you would invest 842,700 in MTN Group on September 14, 2024 and sell it today you would earn a total of 16,000 from holding MTN Group or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AfroCentric Investment Corp vs. MTN Group
Performance |
| Timeline |
| AfroCentric Investment |
| MTN Group |
AfroCentric Investment and MTN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AfroCentric Investment and MTN
The main advantage of trading using opposite AfroCentric Investment and MTN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AfroCentric Investment position performs unexpectedly, MTN 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 will offset losses from the drop in MTN's long position.| AfroCentric Investment vs. Reinet Investments SCA | AfroCentric Investment vs. Brimstone Investment | AfroCentric Investment vs. Safari Investments RSA | AfroCentric Investment vs. RCL Foods |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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