Correlation Between INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE
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By analyzing existing cross correlation between INTERNATIONAL BREWERIES PLC and NIGERIAN EXCHANGE GROUP, you can compare the effects of market volatilities on INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE 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 NIGERIAN EXCHANGE. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE.
Diversification Opportunities for INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between INTERNATIONAL and NIGERIAN is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding INTERNATIONAL BREWERIES PLC and NIGERIAN EXCHANGE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGERIAN EXCHANGE 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 NIGERIAN EXCHANGE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGERIAN EXCHANGE has no effect on the direction of INTERNATIONAL BREWERIES i.e., INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE go up and down completely randomly.
Pair Corralation between INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE
Assuming the 90 days trading horizon INTERNATIONAL BREWERIES PLC is expected to under-perform the NIGERIAN EXCHANGE. But the stock apears to be less risky and, when comparing its historical volatility, INTERNATIONAL BREWERIES PLC is 1.24 times less risky than NIGERIAN EXCHANGE. The stock trades about -0.05 of its potential returns per unit of risk. The NIGERIAN EXCHANGE GROUP is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,140 in NIGERIAN EXCHANGE GROUP on September 12, 2024 and sell it today you would earn a total of 610.00 from holding NIGERIAN EXCHANGE GROUP or generate 28.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTERNATIONAL BREWERIES PLC vs. NIGERIAN EXCHANGE GROUP
Performance |
| Timeline |
| INTERNATIONAL BREWERIES |
| NIGERIAN EXCHANGE |
INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE
The main advantage of trading using opposite INTERNATIONAL BREWERIES and NIGERIAN EXCHANGE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTERNATIONAL BREWERIES position performs unexpectedly, NIGERIAN EXCHANGE 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 NIGERIAN EXCHANGE will offset losses from the drop in NIGERIAN EXCHANGE's long position.The idea behind INTERNATIONAL BREWERIES PLC and NIGERIAN EXCHANGE GROUP 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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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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