Correlation Between KENYA MERCIAL and DCB MERCIAL
Can any of the company-specific risk be diversified away by investing in both KENYA MERCIAL and DCB MERCIAL 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 DCB MERCIAL 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 DCB MERCIAL BANK, you can compare the effects of market volatilities on KENYA MERCIAL and DCB MERCIAL 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 DCB MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA MERCIAL and DCB MERCIAL.
Diversification Opportunities for KENYA MERCIAL and DCB MERCIAL
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KENYA and DCB is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding KENYA MERCIAL BANK and DCB MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCB MERCIAL BANK 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 DCB MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCB MERCIAL BANK has no effect on the direction of KENYA MERCIAL i.e., KENYA MERCIAL and DCB MERCIAL go up and down completely randomly.
Pair Corralation between KENYA MERCIAL and DCB MERCIAL
Assuming the 90 days trading horizon KENYA MERCIAL BANK is expected to generate 2.59 times more return on investment than DCB MERCIAL. However, KENYA MERCIAL is 2.59 times more volatile than DCB MERCIAL BANK. It trades about 0.03 of its potential returns per unit of risk. DCB MERCIAL BANK is currently generating about 0.01 per unit of risk. If you would invest 69,000 in KENYA MERCIAL BANK on September 3, 2024 and sell it today you would earn a total of 8,000 from holding KENYA MERCIAL BANK or generate 11.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENYA MERCIAL BANK vs. DCB MERCIAL BANK
Performance |
| Timeline |
| KENYA MERCIAL BANK |
| DCB MERCIAL BANK |
KENYA MERCIAL and DCB MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENYA MERCIAL and DCB MERCIAL
The main advantage of trading using opposite KENYA MERCIAL and DCB MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENYA MERCIAL position performs unexpectedly, DCB MERCIAL 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 DCB MERCIAL will offset losses from the drop in DCB MERCIAL's long position.| KENYA MERCIAL vs. YETU MICROFINANCE PLC | KENYA MERCIAL vs. CRDB BANK LTD | KENYA MERCIAL vs. NATION MEDIA GROUP | KENYA MERCIAL vs. MWALIMU MERCIAL BANK |
| DCB MERCIAL vs. KENYA MERCIAL BANK | DCB MERCIAL vs. NATIONAL INVESTMENT PANY | DCB MERCIAL vs. AFRIPRISE INVESTMENT PLC | DCB MERCIAL vs. NATIONAL MICROFINANCE 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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