Correlation Between AFRICAN DISTILLERS and SEED
Can any of the company-specific risk be diversified away by investing in both AFRICAN DISTILLERS and SEED 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 AFRICAN DISTILLERS and SEED into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AFRICAN DISTILLERS LIMITED and SEED LIMITED, you can compare the effects of market volatilities on AFRICAN DISTILLERS and SEED 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 SEED. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFRICAN DISTILLERS and SEED.
Diversification Opportunities for AFRICAN DISTILLERS and SEED
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AFRICAN and SEED is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding AFRICAN DISTILLERS LIMITED and SEED LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEED 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 SEED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEED LIMITED has no effect on the direction of AFRICAN DISTILLERS i.e., AFRICAN DISTILLERS and SEED go up and down completely randomly.
Pair Corralation between AFRICAN DISTILLERS and SEED
Assuming the 90 days trading horizon AFRICAN DISTILLERS LIMITED is expected to generate 0.07 times more return on investment than SEED. However, AFRICAN DISTILLERS LIMITED is 14.2 times less risky than SEED. It trades about 0.24 of its potential returns per unit of risk. SEED LIMITED is currently generating about -0.44 per unit of risk. If you would invest 69,100 in AFRICAN DISTILLERS LIMITED on October 11, 2024 and sell it today you would earn a total of 900.00 from holding AFRICAN DISTILLERS LIMITED or generate 1.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
AFRICAN DISTILLERS LIMITED vs. SEED LIMITED
Performance |
| Timeline |
| AFRICAN DISTILLERS |
| SEED LIMITED |
AFRICAN DISTILLERS and SEED Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AFRICAN DISTILLERS and SEED
The main advantage of trading using opposite AFRICAN DISTILLERS and SEED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFRICAN DISTILLERS position performs unexpectedly, SEED 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 SEED will offset losses from the drop in SEED's long position.| AFRICAN DISTILLERS vs. BRITISH AMERICAN TOBACCO | AFRICAN DISTILLERS vs. TANGANDA TEA PANY | AFRICAN DISTILLERS vs. ZB FINANCIAL HOLDINGS | AFRICAN DISTILLERS vs. Cass Saddle Agriculture |
| SEED vs. STAR AFRICA PORATION | SEED vs. CAFCA LIMITED | SEED vs. FIRST MUTUAL PROPERTIES | SEED vs. AFRICAN DISTILLERS LIMITED |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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