Correlation Between ABSA BANK and KENYA ORCHARDS
Can any of the company-specific risk be diversified away by investing in both ABSA BANK and KENYA ORCHARDS 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 ABSA BANK and KENYA ORCHARDS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABSA BANK OF and KENYA ORCHARDS LTD, you can compare the effects of market volatilities on ABSA BANK and KENYA ORCHARDS 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 ABSA BANK with a short position of KENYA ORCHARDS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABSA BANK and KENYA ORCHARDS.
Diversification Opportunities for ABSA BANK and KENYA ORCHARDS
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ABSA and KENYA is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding ABSA BANK OF and KENYA ORCHARDS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENYA ORCHARDS LTD and ABSA BANK 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 ABSA BANK OF are associated (or correlated) with KENYA ORCHARDS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENYA ORCHARDS LTD has no effect on the direction of ABSA BANK i.e., ABSA BANK and KENYA ORCHARDS go up and down completely randomly.
Pair Corralation between ABSA BANK and KENYA ORCHARDS
If you would invest 7,000 in KENYA ORCHARDS LTD on September 4, 2024 and sell it today you would earn a total of 0.00 from holding KENYA ORCHARDS LTD or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABSA BANK OF vs. KENYA ORCHARDS LTD
Performance |
| Timeline |
| ABSA BANK |
| KENYA ORCHARDS LTD |
ABSA BANK and KENYA ORCHARDS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABSA BANK and KENYA ORCHARDS
The main advantage of trading using opposite ABSA BANK and KENYA ORCHARDS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABSA BANK position performs unexpectedly, KENYA ORCHARDS 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 KENYA ORCHARDS will offset losses from the drop in KENYA ORCHARDS's long position.| ABSA BANK vs. EQUITY GROUP HOLDINGS | ABSA BANK vs. BRITISH AMERICAN TOBACCO | ABSA BANK vs. CO OPERATIVE BANK OF | ABSA BANK vs. ABSA NEW GOLD |
| KENYA ORCHARDS vs. EQUITY GROUP HOLDINGS | KENYA ORCHARDS vs. ABSA BANK OF | KENYA ORCHARDS vs. BRITISH AMERICAN TOBACCO | KENYA ORCHARDS vs. CO OPERATIVE BANK OF |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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