Correlation Between KENYA MERCIAL and NATIONAL INVESTMENT
Can any of the company-specific risk be diversified away by investing in both KENYA MERCIAL and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT 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 NATIONAL INVESTMENT PANY, you can compare the effects of market volatilities on KENYA MERCIAL and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA MERCIAL and NATIONAL INVESTMENT.
Diversification Opportunities for KENYA MERCIAL and NATIONAL INVESTMENT
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KENYA and NATIONAL is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding KENYA MERCIAL BANK and NATIONAL INVESTMENT PANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT PANY 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 NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT PANY has no effect on the direction of KENYA MERCIAL i.e., KENYA MERCIAL and NATIONAL INVESTMENT go up and down completely randomly.
Pair Corralation between KENYA MERCIAL and NATIONAL INVESTMENT
Assuming the 90 days trading horizon KENYA MERCIAL BANK is expected to generate 1.76 times more return on investment than NATIONAL INVESTMENT. However, KENYA MERCIAL is 1.76 times more volatile than NATIONAL INVESTMENT PANY. It trades about 0.19 of its potential returns per unit of risk. NATIONAL INVESTMENT PANY is currently generating about 0.07 per unit of risk. If you would invest 80,000 in KENYA MERCIAL BANK on November 4, 2024 and sell it today you would earn a total of 6,000 from holding KENYA MERCIAL BANK or generate 7.5% 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. NATIONAL INVESTMENT PANY
Performance |
| Timeline |
| KENYA MERCIAL BANK |
| NATIONAL INVESTMENT PANY |
KENYA MERCIAL and NATIONAL INVESTMENT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENYA MERCIAL and NATIONAL INVESTMENT
The main advantage of trading using opposite KENYA MERCIAL and NATIONAL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENYA MERCIAL position performs unexpectedly, NATIONAL INVESTMENT 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 NATIONAL INVESTMENT will offset losses from the drop in NATIONAL INVESTMENT'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 |
| NATIONAL INVESTMENT vs. YETU MICROFINANCE PLC | NATIONAL INVESTMENT vs. CRDB BANK LTD | NATIONAL INVESTMENT vs. NATION MEDIA GROUP | NATIONAL INVESTMENT 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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