Correlation Between East Africa and Ihuman
Can any of the company-specific risk be diversified away by investing in both East Africa and Ihuman 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 Africa and Ihuman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Ihuman Inc, you can compare the effects of market volatilities on East Africa and Ihuman 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 Africa with a short position of Ihuman. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Ihuman.
Diversification Opportunities for East Africa and Ihuman
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between East and Ihuman is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Ihuman Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ihuman Inc and East Africa 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 Africa Metals are associated (or correlated) with Ihuman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ihuman Inc has no effect on the direction of East Africa i.e., East Africa and Ihuman go up and down completely randomly.
Pair Corralation between East Africa and Ihuman
Assuming the 90 days horizon East Africa Metals is expected to generate 15.62 times more return on investment than Ihuman. However, East Africa is 15.62 times more volatile than Ihuman Inc. It trades about 0.09 of its potential returns per unit of risk. Ihuman Inc is currently generating about 0.02 per unit of risk. If you would invest 7.91 in East Africa Metals on September 2, 2024 and sell it today you would earn a total of 3.09 from holding East Africa Metals or generate 39.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
East Africa Metals vs. Ihuman Inc
Performance |
| Timeline |
| East Africa Metals |
| Ihuman Inc |
East Africa and Ihuman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Ihuman
The main advantage of trading using opposite East Africa and Ihuman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa position performs unexpectedly, Ihuman 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 Ihuman will offset losses from the drop in Ihuman's long position.| East Africa vs. Pasinex Resources Limited | East Africa vs. Commander Resources | East Africa vs. Forsys Metals Corp | East Africa vs. American CuMo Mining |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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