Correlation Between ECONET WIRELESS and FIRST MUTUAL
Can any of the company-specific risk be diversified away by investing in both ECONET WIRELESS and FIRST MUTUAL 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 ECONET WIRELESS and FIRST MUTUAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECONET WIRELESS HOLDINGS and FIRST MUTUAL PROPERTIES, you can compare the effects of market volatilities on ECONET WIRELESS and FIRST MUTUAL 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 ECONET WIRELESS with a short position of FIRST MUTUAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECONET WIRELESS and FIRST MUTUAL.
Diversification Opportunities for ECONET WIRELESS and FIRST MUTUAL
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ECONET and FIRST is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ECONET WIRELESS HOLDINGS and FIRST MUTUAL PROPERTIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIRST MUTUAL PROPERTIES and ECONET WIRELESS 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 ECONET WIRELESS HOLDINGS are associated (or correlated) with FIRST MUTUAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIRST MUTUAL PROPERTIES has no effect on the direction of ECONET WIRELESS i.e., ECONET WIRELESS and FIRST MUTUAL go up and down completely randomly.
Pair Corralation between ECONET WIRELESS and FIRST MUTUAL
Assuming the 90 days trading horizon ECONET WIRELESS is expected to generate 1.08 times less return on investment than FIRST MUTUAL. In addition to that, ECONET WIRELESS is 1.09 times more volatile than FIRST MUTUAL PROPERTIES. It trades about 0.08 of its total potential returns per unit of risk. FIRST MUTUAL PROPERTIES is currently generating about 0.1 per unit of volatility. If you would invest 1,700,000 in FIRST MUTUAL PROPERTIES on September 14, 2024 and sell it today you would lose (1,689,746) from holding FIRST MUTUAL PROPERTIES or give up 99.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECONET WIRELESS HOLDINGS vs. FIRST MUTUAL PROPERTIES
Performance |
| Timeline |
| ECONET WIRELESS HOLDINGS |
| FIRST MUTUAL PROPERTIES |
ECONET WIRELESS and FIRST MUTUAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECONET WIRELESS and FIRST MUTUAL
The main advantage of trading using opposite ECONET WIRELESS and FIRST MUTUAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECONET WIRELESS position performs unexpectedly, FIRST MUTUAL 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 FIRST MUTUAL will offset losses from the drop in FIRST MUTUAL's long position.| ECONET WIRELESS vs. STAR AFRICA PORATION | ECONET WIRELESS vs. CAFCA LIMITED | ECONET WIRELESS vs. FIRST MUTUAL PROPERTIES | ECONET WIRELESS vs. AFRICAN DISTILLERS LIMITED |
| FIRST MUTUAL vs. BRITISH AMERICAN TOBACCO | FIRST MUTUAL vs. TANGANDA TEA PANY | FIRST MUTUAL vs. ZB FINANCIAL HOLDINGS | FIRST MUTUAL vs. Cass Saddle Agriculture |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |