Correlation Between FDH BANK and NICO HOLDINGS
Can any of the company-specific risk be diversified away by investing in both FDH BANK and NICO HOLDINGS 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 FDH BANK and NICO HOLDINGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FDH BANK PLC and NICO HOLDINGS LIMITED, you can compare the effects of market volatilities on FDH BANK and NICO HOLDINGS 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 FDH BANK with a short position of NICO HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDH BANK and NICO HOLDINGS.
Diversification Opportunities for FDH BANK and NICO HOLDINGS
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FDH and NICO is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FDH BANK PLC and NICO HOLDINGS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICO HOLDINGS LIMITED and FDH BANK 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 FDH BANK PLC are associated (or correlated) with NICO HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICO HOLDINGS LIMITED has no effect on the direction of FDH BANK i.e., FDH BANK and NICO HOLDINGS go up and down completely randomly.
Pair Corralation between FDH BANK and NICO HOLDINGS
Assuming the 90 days trading horizon FDH BANK PLC is expected to generate 1.04 times more return on investment than NICO HOLDINGS. However, FDH BANK is 1.04 times more volatile than NICO HOLDINGS LIMITED. It trades about 0.2 of its potential returns per unit of risk. NICO HOLDINGS LIMITED is currently generating about 0.18 per unit of risk. If you would invest 3,502 in FDH BANK PLC on November 2, 2024 and sell it today you would earn a total of 20,402 from holding FDH BANK PLC or generate 582.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FDH BANK PLC vs. NICO HOLDINGS LIMITED
Performance |
| Timeline |
| FDH BANK PLC |
| NICO HOLDINGS LIMITED |
FDH BANK and NICO HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FDH BANK and NICO HOLDINGS
The main advantage of trading using opposite FDH BANK and NICO HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FDH BANK position performs unexpectedly, NICO HOLDINGS 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 NICO HOLDINGS will offset losses from the drop in NICO HOLDINGS's long position.| FDH BANK vs. NATIONAL INVESTMENT TRUST | FDH BANK vs. NATIONAL BANK OF | FDH BANK vs. SUNBIRD HOTELS TOURISM | FDH BANK vs. MALAWI PROPERTY INVESTMENT |
| NICO HOLDINGS vs. MALAWI PROPERTY INVESTMENT | NICO HOLDINGS vs. STANDARD BANK LIMITED | NICO HOLDINGS vs. NATIONAL INVESTMENT TRUST | NICO HOLDINGS vs. FDH BANK PLC |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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