Correlation Between INTERNATIONAL BREWERIES and IKEJA HOTELS
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By analyzing existing cross correlation between INTERNATIONAL BREWERIES PLC and IKEJA HOTELS PLC, you can compare the effects of market volatilities on INTERNATIONAL BREWERIES and IKEJA HOTELS 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 INTERNATIONAL BREWERIES with a short position of IKEJA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNATIONAL BREWERIES and IKEJA HOTELS.
Diversification Opportunities for INTERNATIONAL BREWERIES and IKEJA HOTELS
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INTERNATIONAL and IKEJA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL BREWERIES PLC and IKEJA HOTELS PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IKEJA HOTELS PLC and INTERNATIONAL BREWERIES 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 INTERNATIONAL BREWERIES PLC are associated (or correlated) with IKEJA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IKEJA HOTELS PLC has no effect on the direction of INTERNATIONAL BREWERIES i.e., INTERNATIONAL BREWERIES and IKEJA HOTELS go up and down completely randomly.
Pair Corralation between INTERNATIONAL BREWERIES and IKEJA HOTELS
Assuming the 90 days trading horizon INTERNATIONAL BREWERIES PLC is expected to under-perform the IKEJA HOTELS. But the stock apears to be less risky and, when comparing its historical volatility, INTERNATIONAL BREWERIES PLC is 2.11 times less risky than IKEJA HOTELS. The stock trades about -0.15 of its potential returns per unit of risk. The IKEJA HOTELS PLC is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,105 in IKEJA HOTELS PLC on October 25, 2024 and sell it today you would earn a total of 245.00 from holding IKEJA HOTELS PLC or generate 22.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERNATIONAL BREWERIES PLC vs. IKEJA HOTELS PLC
Performance |
| Timeline |
| INTERNATIONAL BREWERIES |
| IKEJA HOTELS PLC |
INTERNATIONAL BREWERIES and IKEJA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERNATIONAL BREWERIES and IKEJA HOTELS
The main advantage of trading using opposite INTERNATIONAL BREWERIES and IKEJA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERNATIONAL BREWERIES position performs unexpectedly, IKEJA HOTELS 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 IKEJA HOTELS will offset losses from the drop in IKEJA HOTELS's long position.| INTERNATIONAL BREWERIES vs. GUINEA INSURANCE PLC | INTERNATIONAL BREWERIES vs. SECURE ELECTRONIC TECHNOLOGY | INTERNATIONAL BREWERIES vs. VETIVA BANKING ETF | INTERNATIONAL BREWERIES vs. BUA FOODS PLC |
| IKEJA HOTELS vs. GUINEA INSURANCE PLC | IKEJA HOTELS vs. SECURE ELECTRONIC TECHNOLOGY | IKEJA HOTELS vs. VETIVA BANKING ETF | IKEJA HOTELS vs. BUA FOODS 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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