Correlation Between KENYA MERCIAL and CRDB BANK
Can any of the company-specific risk be diversified away by investing in both KENYA MERCIAL and CRDB BANK 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 KENYA MERCIAL and CRDB BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENYA MERCIAL BANK and CRDB BANK LTD, you can compare the effects of market volatilities on KENYA MERCIAL and CRDB BANK 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 KENYA MERCIAL with a short position of CRDB BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA MERCIAL and CRDB BANK.
Diversification Opportunities for KENYA MERCIAL and CRDB BANK
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KENYA and CRDB is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding KENYA MERCIAL BANK and CRDB BANK LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRDB BANK LTD and KENYA MERCIAL 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 KENYA MERCIAL BANK are associated (or correlated) with CRDB BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRDB BANK LTD has no effect on the direction of KENYA MERCIAL i.e., KENYA MERCIAL and CRDB BANK go up and down completely randomly.
Pair Corralation between KENYA MERCIAL and CRDB BANK
Assuming the 90 days trading horizon KENYA MERCIAL BANK is expected to generate 2.09 times more return on investment than CRDB BANK. However, KENYA MERCIAL is 2.09 times more volatile than CRDB BANK LTD. It trades about 0.07 of its potential returns per unit of risk. CRDB BANK LTD is currently generating about 0.03 per unit of risk. If you would invest 82,000 in KENYA MERCIAL BANK on October 26, 2024 and sell it today you would earn a total of 6,000 from holding KENYA MERCIAL BANK or generate 7.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENYA MERCIAL BANK vs. CRDB BANK LTD
Performance |
| Timeline |
| KENYA MERCIAL BANK |
| CRDB BANK LTD |
KENYA MERCIAL and CRDB BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENYA MERCIAL and CRDB BANK
The main advantage of trading using opposite KENYA MERCIAL and CRDB BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENYA MERCIAL position performs unexpectedly, CRDB BANK 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 CRDB BANK will offset losses from the drop in CRDB BANK's long position.| KENYA MERCIAL vs. YETU MICROFINANCE PLC | KENYA MERCIAL vs. MUCOBA BANK PLC | KENYA MERCIAL vs. TANZANIA PORTLAND CEMENT | KENYA MERCIAL vs. TOL GASES LTD |
| CRDB BANK vs. SWISSPORT TANZANIA LTD | CRDB BANK vs. TANZANIA BREWERIES LTD | CRDB BANK vs. UCHUMI SUPERMARKET LTD | CRDB BANK vs. MWALIMU MERCIAL BANK |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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