Correlation Between KENYA MERCIAL and MAENDELEO BANK
Can any of the company-specific risk be diversified away by investing in both KENYA MERCIAL and MAENDELEO 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 MAENDELEO 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 MAENDELEO BANK PLC, you can compare the effects of market volatilities on KENYA MERCIAL and MAENDELEO 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 MAENDELEO BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA MERCIAL and MAENDELEO BANK.
Diversification Opportunities for KENYA MERCIAL and MAENDELEO BANK
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KENYA and MAENDELEO is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding KENYA MERCIAL BANK and MAENDELEO BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAENDELEO BANK PLC 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 MAENDELEO BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAENDELEO BANK PLC has no effect on the direction of KENYA MERCIAL i.e., KENYA MERCIAL and MAENDELEO BANK go up and down completely randomly.
Pair Corralation between KENYA MERCIAL and MAENDELEO BANK
Assuming the 90 days trading horizon KENYA MERCIAL BANK is expected to generate 2.15 times more return on investment than MAENDELEO BANK. However, KENYA MERCIAL is 2.15 times more volatile than MAENDELEO BANK PLC. It trades about 0.07 of its potential returns per unit of risk. MAENDELEO BANK PLC is currently generating about -0.21 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. MAENDELEO BANK PLC
Performance |
| Timeline |
| KENYA MERCIAL BANK |
| MAENDELEO BANK PLC |
KENYA MERCIAL and MAENDELEO BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENYA MERCIAL and MAENDELEO BANK
The main advantage of trading using opposite KENYA MERCIAL and MAENDELEO BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENYA MERCIAL position performs unexpectedly, MAENDELEO 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 MAENDELEO BANK will offset losses from the drop in MAENDELEO 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 |
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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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