Correlation Between KENYA ORCHARDS and HOME AFRIKA
Can any of the company-specific risk be diversified away by investing in both KENYA ORCHARDS and HOME AFRIKA 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 HOME AFRIKA 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 HOME AFRIKA LTD, you can compare the effects of market volatilities on KENYA ORCHARDS and HOME AFRIKA 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 HOME AFRIKA. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA ORCHARDS and HOME AFRIKA.
Diversification Opportunities for KENYA ORCHARDS and HOME AFRIKA
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KENYA and HOME is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding KENYA ORCHARDS LTD and HOME AFRIKA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME AFRIKA LTD 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 HOME AFRIKA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME AFRIKA LTD has no effect on the direction of KENYA ORCHARDS i.e., KENYA ORCHARDS and HOME AFRIKA go up and down completely randomly.
Pair Corralation between KENYA ORCHARDS and HOME AFRIKA
If you would invest 34.00 in HOME AFRIKA LTD on September 12, 2024 and sell it today you would earn a total of 2.00 from holding HOME AFRIKA LTD or generate 5.88% 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. HOME AFRIKA LTD
Performance |
| Timeline |
| KENYA ORCHARDS LTD |
| HOME AFRIKA LTD |
KENYA ORCHARDS and HOME AFRIKA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KENYA ORCHARDS and HOME AFRIKA
The main advantage of trading using opposite KENYA ORCHARDS and HOME AFRIKA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KENYA ORCHARDS position performs unexpectedly, HOME AFRIKA 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 HOME AFRIKA will offset losses from the drop in HOME AFRIKA'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 |
| HOME AFRIKA vs. NCBA GROUP PLC | HOME AFRIKA vs. EAST AFRICAN BREWERIES | HOME AFRIKA vs. STANDARD CHARTERED BANK | HOME AFRIKA 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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