Correlation Between EQUITY GROUP and NATION MEDIA
Can any of the company-specific risk be diversified away by investing in both EQUITY GROUP and NATION MEDIA 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 EQUITY GROUP and NATION MEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EQUITY GROUP HOLDINGS and NATION MEDIA GROUP, you can compare the effects of market volatilities on EQUITY GROUP and NATION MEDIA 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 EQUITY GROUP with a short position of NATION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of EQUITY GROUP and NATION MEDIA.
Diversification Opportunities for EQUITY GROUP and NATION MEDIA
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between EQUITY and NATION is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding EQUITY GROUP HOLDINGS and NATION MEDIA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATION MEDIA GROUP and EQUITY GROUP 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 EQUITY GROUP HOLDINGS are associated (or correlated) with NATION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATION MEDIA GROUP has no effect on the direction of EQUITY GROUP i.e., EQUITY GROUP and NATION MEDIA go up and down completely randomly.
Pair Corralation between EQUITY GROUP and NATION MEDIA
Assuming the 90 days trading horizon EQUITY GROUP HOLDINGS is expected to generate 0.53 times more return on investment than NATION MEDIA. However, EQUITY GROUP HOLDINGS is 1.89 times less risky than NATION MEDIA. It trades about 0.0 of its potential returns per unit of risk. NATION MEDIA GROUP is currently generating about -0.22 per unit of risk. If you would invest 4,810 in EQUITY GROUP HOLDINGS on September 12, 2024 and sell it today you would lose (10.00) from holding EQUITY GROUP HOLDINGS or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
EQUITY GROUP HOLDINGS vs. NATION MEDIA GROUP
Performance |
| Timeline |
| EQUITY GROUP HOLDINGS |
| NATION MEDIA GROUP |
EQUITY GROUP and NATION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EQUITY GROUP and NATION MEDIA
The main advantage of trading using opposite EQUITY GROUP and NATION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQUITY GROUP position performs unexpectedly, NATION MEDIA 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 NATION MEDIA will offset losses from the drop in NATION MEDIA's long position.| EQUITY GROUP vs. CARBACID INVESTMENTS LTD | EQUITY GROUP vs. UCHUMI SUPERMARKET PLC | EQUITY GROUP vs. EAST AFRICAN BREWERIES | EQUITY GROUP vs. Kenya Reinsurance |
| NATION MEDIA vs. CENTUM INVESTMENT PANY | NATION MEDIA vs. BRITISH AMERICAN TOBACCO | NATION MEDIA vs. DIAMOND TRUST BANK | NATION MEDIA vs. Kenya Reinsurance |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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