Correlation Between KENYA MERCIAL and NATION MEDIA
Can any of the company-specific risk be diversified away by investing in both KENYA MERCIAL and NATION MEDIA 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 NATION MEDIA 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 NATION MEDIA GROUP, you can compare the effects of market volatilities on KENYA MERCIAL and NATION MEDIA 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 NATION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA MERCIAL and NATION MEDIA.
Diversification Opportunities for KENYA MERCIAL and NATION MEDIA
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KENYA and NATION is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding KENYA MERCIAL BANK and NATION MEDIA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATION MEDIA GROUP 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 NATION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATION MEDIA GROUP has no effect on the direction of KENYA MERCIAL i.e., KENYA MERCIAL and NATION MEDIA go up and down completely randomly.
Pair Corralation between KENYA MERCIAL and NATION MEDIA
Assuming the 90 days trading horizon KENYA MERCIAL BANK is expected to generate 2.76 times more return on investment than NATION MEDIA. However, KENYA MERCIAL is 2.76 times more volatile than NATION MEDIA GROUP. It trades about 0.1 of its potential returns per unit of risk. NATION MEDIA GROUP is currently generating about -0.05 per unit of risk. If you would invest 31,500 in KENYA MERCIAL BANK on September 3, 2024 and sell it today you would earn a total of 45,500 from holding KENYA MERCIAL BANK or generate 144.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENYA MERCIAL BANK vs. NATION MEDIA GROUP
Performance |
| Timeline |
| KENYA MERCIAL BANK |
| NATION MEDIA GROUP |
KENYA MERCIAL and NATION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENYA MERCIAL and NATION MEDIA
The main advantage of trading using opposite KENYA MERCIAL and NATION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENYA MERCIAL position performs unexpectedly, NATION MEDIA 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 NATION MEDIA will offset losses from the drop in NATION MEDIA'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 |
| NATION MEDIA vs. UCHUMI SUPERMARKET LTD | NATION MEDIA vs. SWISSPORT TANZANIA LTD | NATION MEDIA vs. NATIONAL MICROFINANCE BANK | NATION MEDIA vs. KENYA 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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