Correlation Between EAST AFRICAN and CENTUM INVESTMENT
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By analyzing existing cross correlation between EAST AFRICAN BREWERIES and CENTUM INVESTMENT PANY, you can compare the effects of market volatilities on EAST AFRICAN and CENTUM INVESTMENT 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 CENTUM INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAST AFRICAN and CENTUM INVESTMENT.
Diversification Opportunities for EAST AFRICAN and CENTUM INVESTMENT
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EAST and CENTUM is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding EAST AFRICAN BREWERIES and CENTUM INVESTMENT PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTUM INVESTMENT PANY 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 CENTUM INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTUM INVESTMENT PANY has no effect on the direction of EAST AFRICAN i.e., EAST AFRICAN and CENTUM INVESTMENT go up and down completely randomly.
Pair Corralation between EAST AFRICAN and CENTUM INVESTMENT
Assuming the 90 days trading horizon EAST AFRICAN is expected to generate 2.74 times less return on investment than CENTUM INVESTMENT. But when comparing it to its historical volatility, EAST AFRICAN BREWERIES is 1.49 times less risky than CENTUM INVESTMENT. It trades about 0.01 of its potential returns per unit of risk. CENTUM INVESTMENT PANY is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 834.00 in CENTUM INVESTMENT PANY on September 12, 2024 and sell it today you would earn a total of 124.00 from holding CENTUM INVESTMENT PANY or generate 14.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAST AFRICAN BREWERIES vs. CENTUM INVESTMENT PANY
Performance |
| Timeline |
| EAST AFRICAN BREWERIES |
| CENTUM INVESTMENT PANY |
EAST AFRICAN and CENTUM INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAST AFRICAN and CENTUM INVESTMENT
The main advantage of trading using opposite EAST AFRICAN and CENTUM INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAST AFRICAN position performs unexpectedly, CENTUM INVESTMENT 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 CENTUM INVESTMENT will offset losses from the drop in CENTUM INVESTMENT's long position.| EAST AFRICAN vs. KENYA ORCHARDS LTD | EAST AFRICAN vs. NAIROBI BUSINESS VENTURES | EAST AFRICAN vs. KENYA RE INSURANCE PORATION | EAST AFRICAN vs. WPP SCANGROUP PLC |
| CENTUM INVESTMENT vs. NCBA GROUP PLC | CENTUM INVESTMENT vs. EAST AFRICAN BREWERIES | CENTUM INVESTMENT vs. STANDARD CHARTERED BANK | CENTUM INVESTMENT vs. ABSA 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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