Correlation Between AFRICAN DISTILLERS and CAFCA
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By analyzing existing cross correlation between AFRICAN DISTILLERS LIMITED and CAFCA LIMITED, you can compare the effects of market volatilities on AFRICAN DISTILLERS and CAFCA 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 AFRICAN DISTILLERS with a short position of CAFCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFRICAN DISTILLERS and CAFCA.
Diversification Opportunities for AFRICAN DISTILLERS and CAFCA
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AFRICAN and CAFCA is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AFRICAN DISTILLERS LIMITED and CAFCA LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAFCA LIMITED and AFRICAN DISTILLERS 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 AFRICAN DISTILLERS LIMITED are associated (or correlated) with CAFCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAFCA LIMITED has no effect on the direction of AFRICAN DISTILLERS i.e., AFRICAN DISTILLERS and CAFCA go up and down completely randomly.
Pair Corralation between AFRICAN DISTILLERS and CAFCA
Assuming the 90 days trading horizon AFRICAN DISTILLERS LIMITED is expected to under-perform the CAFCA. In addition to that, AFRICAN DISTILLERS is 1.24 times more volatile than CAFCA LIMITED. It trades about -0.11 of its total potential returns per unit of risk. CAFCA LIMITED is currently generating about 0.3 per unit of volatility. If you would invest 156,000 in CAFCA LIMITED on August 30, 2024 and sell it today you would earn a total of 49,000 from holding CAFCA LIMITED or generate 31.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AFRICAN DISTILLERS LIMITED vs. CAFCA LIMITED
Performance |
| Timeline |
| AFRICAN DISTILLERS |
| CAFCA LIMITED |
AFRICAN DISTILLERS and CAFCA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFRICAN DISTILLERS and CAFCA
The main advantage of trading using opposite AFRICAN DISTILLERS and CAFCA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFRICAN DISTILLERS position performs unexpectedly, CAFCA 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 CAFCA will offset losses from the drop in CAFCA's long position.| AFRICAN DISTILLERS vs. FIRST MUTUAL PROPERTIES | AFRICAN DISTILLERS vs. BRITISH AMERICAN TOBACCO | AFRICAN DISTILLERS vs. TANGANDA TEA PANY | AFRICAN DISTILLERS vs. ZB FINANCIAL HOLDINGS |
| CAFCA vs. FIRST MUTUAL PROPERTIES | CAFCA vs. BRITISH AMERICAN TOBACCO | CAFCA vs. TANGANDA TEA PANY | CAFCA vs. ZB FINANCIAL HOLDINGS |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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