Correlation Between KCB GROUP and KENYA AIRWAYS
Can any of the company-specific risk be diversified away by investing in both KCB GROUP and KENYA AIRWAYS 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 KCB GROUP and KENYA AIRWAYS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KCB GROUP LTD and KENYA AIRWAYS LTD, you can compare the effects of market volatilities on KCB GROUP and KENYA AIRWAYS 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 KCB GROUP with a short position of KENYA AIRWAYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KCB GROUP and KENYA AIRWAYS.
Diversification Opportunities for KCB GROUP and KENYA AIRWAYS
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KCB and KENYA is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding KCB GROUP LTD and KENYA AIRWAYS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENYA AIRWAYS LTD and KCB GROUP 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 KCB GROUP LTD are associated (or correlated) with KENYA AIRWAYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENYA AIRWAYS LTD has no effect on the direction of KCB GROUP i.e., KCB GROUP and KENYA AIRWAYS go up and down completely randomly.
Pair Corralation between KCB GROUP and KENYA AIRWAYS
Assuming the 90 days trading horizon KCB GROUP LTD is expected to under-perform the KENYA AIRWAYS. But the stock apears to be less risky and, when comparing its historical volatility, KCB GROUP LTD is 4.17 times less risky than KENYA AIRWAYS. The stock trades about -0.15 of its potential returns per unit of risk. The KENYA AIRWAYS LTD is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 16,016 in KENYA AIRWAYS LTD on November 28, 2024 and sell it today you would lose (623.00) from holding KENYA AIRWAYS LTD or give up 3.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KCB GROUP LTD vs. KENYA AIRWAYS LTD
Performance |
| Timeline |
| KCB GROUP LTD |
| KENYA AIRWAYS LTD |
KCB GROUP and KENYA AIRWAYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KCB GROUP and KENYA AIRWAYS
The main advantage of trading using opposite KCB GROUP and KENYA AIRWAYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KCB GROUP position performs unexpectedly, KENYA AIRWAYS 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 KENYA AIRWAYS will offset losses from the drop in KENYA AIRWAYS's long position.| KCB GROUP vs. AIRTEL UGANDA LIMITED | KCB GROUP vs. NEW VISION PRINTING | KCB GROUP vs. NATION MEDIA GROUP | KCB GROUP vs. CENTUM INVESTMENT PANY |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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