Correlation Between CRDB BANK and DCB MERCIAL
Can any of the company-specific risk be diversified away by investing in both CRDB BANK and DCB MERCIAL 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 CRDB BANK and DCB MERCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CRDB BANK LTD and DCB MERCIAL BANK, you can compare the effects of market volatilities on CRDB BANK and DCB MERCIAL 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 CRDB BANK with a short position of DCB MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRDB BANK and DCB MERCIAL.
Diversification Opportunities for CRDB BANK and DCB MERCIAL
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between CRDB and DCB is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding CRDB BANK LTD and DCB MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCB MERCIAL BANK and CRDB 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 CRDB BANK LTD are associated (or correlated) with DCB MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCB MERCIAL BANK has no effect on the direction of CRDB BANK i.e., CRDB BANK and DCB MERCIAL go up and down completely randomly.
Pair Corralation between CRDB BANK and DCB MERCIAL
Assuming the 90 days trading horizon CRDB BANK is expected to generate 1.72 times less return on investment than DCB MERCIAL. But when comparing it to its historical volatility, CRDB BANK LTD is 2.26 times less risky than DCB MERCIAL. It trades about 0.16 of its potential returns per unit of risk. DCB MERCIAL BANK is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 13,500 in DCB MERCIAL BANK on November 5, 2024 and sell it today you would earn a total of 500.00 from holding DCB MERCIAL BANK or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
CRDB BANK LTD vs. DCB MERCIAL BANK
Performance |
| Timeline |
| CRDB BANK LTD |
| DCB MERCIAL BANK |
CRDB BANK and DCB MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CRDB BANK and DCB MERCIAL
The main advantage of trading using opposite CRDB BANK and DCB MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CRDB BANK position performs unexpectedly, DCB MERCIAL 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 DCB MERCIAL will offset losses from the drop in DCB MERCIAL's long position.| CRDB BANK vs. YETU MICROFINANCE PLC | CRDB BANK vs. NATION MEDIA GROUP | CRDB BANK vs. MWALIMU MERCIAL BANK | CRDB BANK vs. AFRIPRISE INVESTMENT PLC |
| DCB MERCIAL vs. YETU MICROFINANCE PLC | DCB MERCIAL vs. CRDB BANK LTD | DCB MERCIAL vs. NATION MEDIA GROUP | DCB MERCIAL vs. MWALIMU MERCIAL BANK |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |