Correlation Between ASO SAVINGS and Nigerian Stock

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Apply Can any of the company-specific risk be diversified away by investing in both ASO SAVINGS and Nigerian Stock 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 ASO SAVINGS and Nigerian Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.

Diversification Opportunities for ASO SAVINGS and Nigerian Stock

Pair Corralation between ASO SAVINGS and Nigerian Stock

ASO SAVINGS AND  vs.  Nigerian Stock Exchange

Pair Trading with ASO SAVINGS and Nigerian Stock

The main advantage of trading using opposite ASO SAVINGS and Nigerian Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASO SAVINGS position performs unexpectedly, Nigerian Stock 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 Nigerian Stock will offset losses from the drop in Nigerian Stock's long position.The idea behind ASO SAVINGS AND and Nigerian Stock Exchange 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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