Correlation Between DCB MERCIAL and KENYA MERCIAL
Can any of the company-specific risk be diversified away by investing in both DCB MERCIAL and KENYA 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 DCB MERCIAL and KENYA MERCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DCB MERCIAL BANK and KENYA MERCIAL BANK, you can compare the effects of market volatilities on DCB MERCIAL and KENYA 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 DCB MERCIAL with a short position of KENYA MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DCB MERCIAL and KENYA MERCIAL.
Diversification Opportunities for DCB MERCIAL and KENYA MERCIAL
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DCB and KENYA is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding DCB MERCIAL BANK and KENYA MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENYA MERCIAL BANK and DCB MERCIAL 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 DCB MERCIAL BANK are associated (or correlated) with KENYA MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENYA MERCIAL BANK has no effect on the direction of DCB MERCIAL i.e., DCB MERCIAL and KENYA MERCIAL go up and down completely randomly.
Pair Corralation between DCB MERCIAL and KENYA MERCIAL
Assuming the 90 days trading horizon DCB MERCIAL BANK is expected to under-perform the KENYA MERCIAL. But the stock apears to be less risky and, when comparing its historical volatility, DCB MERCIAL BANK is 1.14 times less risky than KENYA MERCIAL. The stock trades about -0.18 of its potential returns per unit of risk. The KENYA MERCIAL BANK is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 82,000 in KENYA MERCIAL BANK on October 26, 2024 and sell it today you would earn a total of 6,000 from holding KENYA MERCIAL BANK or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DCB MERCIAL BANK vs. KENYA MERCIAL BANK
Performance |
| Timeline |
| DCB MERCIAL BANK |
| KENYA MERCIAL BANK |
DCB MERCIAL and KENYA MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DCB MERCIAL and KENYA MERCIAL
The main advantage of trading using opposite DCB MERCIAL and KENYA MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DCB MERCIAL position performs unexpectedly, KENYA 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 KENYA MERCIAL will offset losses from the drop in KENYA MERCIAL's long position.| DCB MERCIAL vs. YETU MICROFINANCE PLC | DCB MERCIAL vs. MUCOBA BANK PLC | DCB MERCIAL vs. TANZANIA PORTLAND CEMENT | DCB MERCIAL vs. TOL GASES LTD |
| KENYA MERCIAL vs. YETU MICROFINANCE PLC | KENYA MERCIAL vs. MUCOBA BANK PLC | KENYA MERCIAL vs. TANZANIA PORTLAND CEMENT | KENYA MERCIAL vs. TOL GASES LTD |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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