Correlation Between BRITISH AMERICAN and NAIROBI BUSINESS
Can any of the company-specific risk be diversified away by investing in both BRITISH AMERICAN and NAIROBI BUSINESS 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 BRITISH AMERICAN and NAIROBI BUSINESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BRITISH AMERICAN TOBACCO and NAIROBI BUSINESS VENTURES, you can compare the effects of market volatilities on BRITISH AMERICAN and NAIROBI BUSINESS 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 BRITISH AMERICAN with a short position of NAIROBI BUSINESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BRITISH AMERICAN and NAIROBI BUSINESS.
Diversification Opportunities for BRITISH AMERICAN and NAIROBI BUSINESS
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between BRITISH and NAIROBI is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding BRITISH AMERICAN TOBACCO and NAIROBI BUSINESS VENTURES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAIROBI BUSINESS VENTURES and BRITISH AMERICAN 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 BRITISH AMERICAN TOBACCO are associated (or correlated) with NAIROBI BUSINESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAIROBI BUSINESS VENTURES has no effect on the direction of BRITISH AMERICAN i.e., BRITISH AMERICAN and NAIROBI BUSINESS go up and down completely randomly.
Pair Corralation between BRITISH AMERICAN and NAIROBI BUSINESS
Assuming the 90 days trading horizon BRITISH AMERICAN is expected to generate 37.8 times less return on investment than NAIROBI BUSINESS. But when comparing it to its historical volatility, BRITISH AMERICAN TOBACCO is 4.75 times less risky than NAIROBI BUSINESS. It trades about 0.0 of its potential returns per unit of risk. NAIROBI BUSINESS VENTURES is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 208.00 in NAIROBI BUSINESS VENTURES on September 2, 2024 and sell it today you would earn a total of 1.00 from holding NAIROBI BUSINESS VENTURES or generate 0.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BRITISH AMERICAN TOBACCO vs. NAIROBI BUSINESS VENTURES
Performance |
| Timeline |
| BRITISH AMERICAN TOBACCO |
| NAIROBI BUSINESS VENTURES |
BRITISH AMERICAN and NAIROBI BUSINESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BRITISH AMERICAN and NAIROBI BUSINESS
The main advantage of trading using opposite BRITISH AMERICAN and NAIROBI BUSINESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BRITISH AMERICAN position performs unexpectedly, NAIROBI BUSINESS 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 NAIROBI BUSINESS will offset losses from the drop in NAIROBI BUSINESS's long position.| BRITISH AMERICAN vs. HOME AFRIKA LTD | BRITISH AMERICAN vs. ABSA BANK OF | BRITISH AMERICAN vs. CO OPERATIVE BANK OF | BRITISH AMERICAN vs. CENTUM INVESTMENT PANY |
| NAIROBI BUSINESS vs. KENYA RE INSURANCE PORATION | NAIROBI BUSINESS vs. HOMEBOYZ ENTERTAINMENT PLC | NAIROBI BUSINESS vs. TOTALENERGIES MARKETING KENYA | NAIROBI BUSINESS vs. EAST AFRICAN BREWERIES |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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