Correlation Between CHAMPION BREWERIES and IKEJA HOTELS
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By analyzing existing cross correlation between CHAMPION BREWERIES PLC and IKEJA HOTELS PLC, you can compare the effects of market volatilities on CHAMPION BREWERIES and IKEJA HOTELS 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 CHAMPION BREWERIES with a short position of IKEJA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHAMPION BREWERIES and IKEJA HOTELS.
Diversification Opportunities for CHAMPION BREWERIES and IKEJA HOTELS
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CHAMPION and IKEJA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding CHAMPION BREWERIES PLC and IKEJA HOTELS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IKEJA HOTELS PLC and CHAMPION BREWERIES 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 CHAMPION BREWERIES PLC are associated (or correlated) with IKEJA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IKEJA HOTELS PLC has no effect on the direction of CHAMPION BREWERIES i.e., CHAMPION BREWERIES and IKEJA HOTELS go up and down completely randomly.
Pair Corralation between CHAMPION BREWERIES and IKEJA HOTELS
Assuming the 90 days trading horizon CHAMPION BREWERIES is expected to generate 4.64 times less return on investment than IKEJA HOTELS. But when comparing it to its historical volatility, CHAMPION BREWERIES PLC is 1.11 times less risky than IKEJA HOTELS. It trades about 0.03 of its potential returns per unit of risk. IKEJA HOTELS PLC is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 96.00 in IKEJA HOTELS PLC on September 3, 2024 and sell it today you would earn a total of 649.00 from holding IKEJA HOTELS PLC or generate 676.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.38% |
| Values | Daily Returns |
CHAMPION BREWERIES PLC vs. IKEJA HOTELS PLC
Performance |
| Timeline |
| CHAMPION BREWERIES PLC |
| IKEJA HOTELS PLC |
CHAMPION BREWERIES and IKEJA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHAMPION BREWERIES and IKEJA HOTELS
The main advantage of trading using opposite CHAMPION BREWERIES and IKEJA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHAMPION BREWERIES position performs unexpectedly, IKEJA HOTELS 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 IKEJA HOTELS will offset losses from the drop in IKEJA HOTELS's long position.| CHAMPION BREWERIES vs. ABC TRANSPORT PLC | CHAMPION BREWERIES vs. INTERNATIONAL BREWERIES PLC | CHAMPION BREWERIES vs. NEM INSURANCE PLC | CHAMPION BREWERIES vs. UNION HOMES REAL |
| IKEJA HOTELS vs. STANDARD ALLIANCE INSURANCE | IKEJA HOTELS vs. INTERNATIONAL BREWERIES PLC | IKEJA HOTELS vs. ASO SAVINGS AND | IKEJA HOTELS vs. CHAMPION BREWERIES PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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