Correlation Between EAST AFRICAN and TANZANIA CIGARETTE
Can any of the company-specific risk be diversified away by investing in both EAST AFRICAN and TANZANIA CIGARETTE 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 EAST AFRICAN and TANZANIA CIGARETTE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EAST AFRICAN BREWERIES and TANZANIA CIGARETTE LTD, you can compare the effects of market volatilities on EAST AFRICAN and TANZANIA CIGARETTE 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 EAST AFRICAN with a short position of TANZANIA CIGARETTE. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAST AFRICAN and TANZANIA CIGARETTE.
Diversification Opportunities for EAST AFRICAN and TANZANIA CIGARETTE
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between EAST and TANZANIA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EAST AFRICAN BREWERIES and TANZANIA CIGARETTE LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TANZANIA CIGARETTE LTD and EAST AFRICAN 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 EAST AFRICAN BREWERIES are associated (or correlated) with TANZANIA CIGARETTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TANZANIA CIGARETTE LTD has no effect on the direction of EAST AFRICAN i.e., EAST AFRICAN and TANZANIA CIGARETTE go up and down completely randomly.
Pair Corralation between EAST AFRICAN and TANZANIA CIGARETTE
If you would invest 334,000 in EAST AFRICAN BREWERIES on October 24, 2024 and sell it today you would earn a total of 19,000 from holding EAST AFRICAN BREWERIES or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAST AFRICAN BREWERIES vs. TANZANIA CIGARETTE LTD
Performance |
| Timeline |
| EAST AFRICAN BREWERIES |
| TANZANIA CIGARETTE LTD |
EAST AFRICAN and TANZANIA CIGARETTE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAST AFRICAN and TANZANIA CIGARETTE
The main advantage of trading using opposite EAST AFRICAN and TANZANIA CIGARETTE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAST AFRICAN position performs unexpectedly, TANZANIA CIGARETTE 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 TANZANIA CIGARETTE will offset losses from the drop in TANZANIA CIGARETTE's long position.| EAST AFRICAN vs. NATION MEDIA GROUP | EAST AFRICAN vs. MKOMBOZI MERCIAL BANK | EAST AFRICAN vs. NATIONAL INVESTMENT PANY | EAST AFRICAN vs. JATU PLC |
| TANZANIA CIGARETTE vs. NATION MEDIA GROUP | TANZANIA CIGARETTE vs. MKOMBOZI MERCIAL BANK | TANZANIA CIGARETTE vs. NATIONAL INVESTMENT PANY | TANZANIA CIGARETTE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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