Correlation Between KENYA ORCHARDS and BRITISH AMERICAN
Can any of the company-specific risk be diversified away by investing in both KENYA ORCHARDS and BRITISH AMERICAN 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 ORCHARDS and BRITISH AMERICAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KENYA ORCHARDS LTD and BRITISH AMERICAN TOBACCO, you can compare the effects of market volatilities on KENYA ORCHARDS and BRITISH AMERICAN 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 ORCHARDS with a short position of BRITISH AMERICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA ORCHARDS and BRITISH AMERICAN.
Diversification Opportunities for KENYA ORCHARDS and BRITISH AMERICAN
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KENYA and BRITISH is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding KENYA ORCHARDS LTD and BRITISH AMERICAN TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BRITISH AMERICAN TOBACCO and KENYA ORCHARDS 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 ORCHARDS LTD are associated (or correlated) with BRITISH AMERICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BRITISH AMERICAN TOBACCO has no effect on the direction of KENYA ORCHARDS i.e., KENYA ORCHARDS and BRITISH AMERICAN go up and down completely randomly.
Pair Corralation between KENYA ORCHARDS and BRITISH AMERICAN
If you would invest 35,000 in BRITISH AMERICAN TOBACCO on September 12, 2024 and sell it today you would earn a total of 0.00 from holding BRITISH AMERICAN TOBACCO or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KENYA ORCHARDS LTD vs. BRITISH AMERICAN TOBACCO
Performance |
| Timeline |
| KENYA ORCHARDS LTD |
| BRITISH AMERICAN TOBACCO |
KENYA ORCHARDS and BRITISH AMERICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENYA ORCHARDS and BRITISH AMERICAN
The main advantage of trading using opposite KENYA ORCHARDS and BRITISH AMERICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENYA ORCHARDS position performs unexpectedly, BRITISH AMERICAN 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 BRITISH AMERICAN will offset losses from the drop in BRITISH AMERICAN's long position.| KENYA ORCHARDS vs. NCBA GROUP PLC | KENYA ORCHARDS vs. EAST AFRICAN BREWERIES | KENYA ORCHARDS vs. STANDARD CHARTERED BANK | KENYA ORCHARDS vs. ABSA BANK OF |
| BRITISH AMERICAN vs. NCBA GROUP PLC | BRITISH AMERICAN vs. EAST AFRICAN BREWERIES | BRITISH AMERICAN vs. STANDARD CHARTERED BANK | BRITISH AMERICAN vs. ABSA BANK OF |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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