Correlation Between HOME AFRIKA and KENYA RE

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Can any of the company-specific risk be diversified away by investing in both HOME AFRIKA and KENYA RE 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 KENYA RE 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 KENYA RE INSURANCE PORATION, you can compare the effects of market volatilities on HOME AFRIKA and KENYA RE 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 KENYA RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of HOME AFRIKA and KENYA RE.

Diversification Opportunities for HOME AFRIKA and KENYA RE

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between HOME and KENYA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding HOME AFRIKA LTD and KENYA RE INSURANCE PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENYA RE INSURANCE 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 KENYA RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENYA RE INSURANCE has no effect on the direction of HOME AFRIKA i.e., HOME AFRIKA and KENYA RE go up and down completely randomly.

Pair Corralation between HOME AFRIKA and KENYA RE

Assuming the 90 days trading horizon HOME AFRIKA LTD is expected to generate 2.04 times more return on investment than KENYA RE. However, HOME AFRIKA is 2.04 times more volatile than KENYA RE INSURANCE PORATION. It trades about 0.09 of its potential returns per unit of risk. KENYA RE INSURANCE PORATION is currently generating about -0.16 per unit of risk. If you would invest  34.00  in HOME AFRIKA LTD on August 25, 2024 and sell it today you would earn a total of  2.00  from holding HOME AFRIKA LTD or generate 5.88% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

HOME AFRIKA LTD  vs.  KENYA RE INSURANCE PORATION

 Performance 
       Timeline  
HOME AFRIKA LTD 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in HOME AFRIKA LTD are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HOME AFRIKA sustained solid returns over the last few months and may actually be approaching a breakup point.
KENYA RE INSURANCE 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in KENYA RE INSURANCE PORATION are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, KENYA RE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

HOME AFRIKA and KENYA RE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with HOME AFRIKA and KENYA RE

The main advantage of trading using opposite HOME AFRIKA and KENYA RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HOME AFRIKA position performs unexpectedly, KENYA RE 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 KENYA RE will offset losses from the drop in KENYA RE's long position.
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The idea behind HOME AFRIKA LTD and KENYA RE INSURANCE PORATION pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

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