Correlation Between EAST AFRICAN and HOME AFRIKA
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By analyzing existing cross correlation between EAST AFRICAN BREWERIES and HOME AFRIKA LTD, you can compare the effects of market volatilities on EAST AFRICAN and HOME AFRIKA 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 HOME AFRIKA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EAST AFRICAN and HOME AFRIKA.
Diversification Opportunities for EAST AFRICAN and HOME AFRIKA
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between EAST and HOME is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding EAST AFRICAN BREWERIES and HOME AFRIKA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME AFRIKA 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 HOME AFRIKA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME AFRIKA LTD has no effect on the direction of EAST AFRICAN i.e., EAST AFRICAN and HOME AFRIKA go up and down completely randomly.
Pair Corralation between EAST AFRICAN and HOME AFRIKA
Assuming the 90 days trading horizon EAST AFRICAN BREWERIES is expected to under-perform the HOME AFRIKA. But the stock apears to be less risky and, when comparing its historical volatility, EAST AFRICAN BREWERIES is 2.05 times less risky than HOME AFRIKA. The stock trades about -0.24 of its potential returns per unit of risk. The HOME AFRIKA LTD is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 32.00 in HOME AFRIKA LTD on September 3, 2024 and sell it today you would earn a total of 3.00 from holding HOME AFRIKA LTD or generate 9.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EAST AFRICAN BREWERIES vs. HOME AFRIKA LTD
Performance |
| Timeline |
| EAST AFRICAN BREWERIES |
| HOME AFRIKA LTD |
EAST AFRICAN and HOME AFRIKA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EAST AFRICAN and HOME AFRIKA
The main advantage of trading using opposite EAST AFRICAN and HOME AFRIKA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EAST AFRICAN position performs unexpectedly, HOME AFRIKA 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 HOME AFRIKA will offset losses from the drop in HOME AFRIKA's long position.| EAST AFRICAN vs. CIC INSURANCE GROUP | EAST AFRICAN vs. NATION MEDIA GROUP | EAST AFRICAN vs. HOMEBOYZ ENTERTAINMENT PLC | EAST AFRICAN vs. CARBACID INVESTMENTS LTD |
| HOME AFRIKA vs. EQUITY GROUP HOLDINGS | HOME AFRIKA vs. ABSA BANK OF | HOME AFRIKA vs. BRITISH AMERICAN TOBACCO | HOME AFRIKA vs. CO OPERATIVE 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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