Correlation Between HOME AFRIKA and DIAMOND TRUST
Can any of the company-specific risk be diversified away by investing in both HOME AFRIKA and DIAMOND TRUST 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 HOME AFRIKA and DIAMOND TRUST into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HOME AFRIKA LTD and DIAMOND TRUST BANK, you can compare the effects of market volatilities on HOME AFRIKA and DIAMOND TRUST 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 HOME AFRIKA with a short position of DIAMOND TRUST. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME AFRIKA and DIAMOND TRUST.
Diversification Opportunities for HOME AFRIKA and DIAMOND TRUST
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between HOME and DIAMOND is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding HOME AFRIKA LTD and DIAMOND TRUST BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIAMOND TRUST BANK and HOME AFRIKA 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 HOME AFRIKA LTD are associated (or correlated) with DIAMOND TRUST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIAMOND TRUST BANK has no effect on the direction of HOME AFRIKA i.e., HOME AFRIKA and DIAMOND TRUST go up and down completely randomly.
Pair Corralation between HOME AFRIKA and DIAMOND TRUST
Assuming the 90 days trading horizon HOME AFRIKA LTD is expected to generate 4.71 times more return on investment than DIAMOND TRUST. However, HOME AFRIKA is 4.71 times more volatile than DIAMOND TRUST BANK. It trades about 0.13 of its potential returns per unit of risk. DIAMOND TRUST BANK is currently generating about 0.06 per unit of risk. If you would invest 32.00 in HOME AFRIKA LTD on September 2, 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 |
HOME AFRIKA LTD vs. DIAMOND TRUST BANK
Performance |
| Timeline |
| HOME AFRIKA LTD |
| DIAMOND TRUST BANK |
HOME AFRIKA and DIAMOND TRUST Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HOME AFRIKA and DIAMOND TRUST
The main advantage of trading using opposite HOME AFRIKA and DIAMOND TRUST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME AFRIKA position performs unexpectedly, DIAMOND TRUST 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 DIAMOND TRUST will offset losses from the drop in DIAMOND TRUST's long position.| HOME AFRIKA vs. CENTUM INVESTMENT PANY | HOME AFRIKA vs. TOTALENERGIES MARKETING KENYA | HOME AFRIKA vs. DIAMOND TRUST BANK | HOME AFRIKA vs. CARBACID INVESTMENTS LTD |
| DIAMOND TRUST vs. TOTALENERGIES MARKETING KENYA | DIAMOND TRUST vs. HOMEBOYZ ENTERTAINMENT PLC | DIAMOND TRUST vs. BRITISH AMERICAN TOBACCO | DIAMOND TRUST vs. HOME AFRIKA LTD |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |