Correlation Between MAENDELEO BANK and EAST AFRICAN
Can any of the company-specific risk be diversified away by investing in both MAENDELEO BANK and EAST AFRICAN 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 MAENDELEO BANK and EAST AFRICAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MAENDELEO BANK PLC and EAST AFRICAN BREWERIES, you can compare the effects of market volatilities on MAENDELEO BANK and EAST AFRICAN 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 MAENDELEO BANK with a short position of EAST AFRICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAENDELEO BANK and EAST AFRICAN.
Diversification Opportunities for MAENDELEO BANK and EAST AFRICAN
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MAENDELEO and EAST is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MAENDELEO BANK PLC and EAST AFRICAN BREWERIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST AFRICAN BREWERIES and MAENDELEO BANK 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 MAENDELEO BANK PLC are associated (or correlated) with EAST AFRICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST AFRICAN BREWERIES has no effect on the direction of MAENDELEO BANK i.e., MAENDELEO BANK and EAST AFRICAN go up and down completely randomly.
Pair Corralation between MAENDELEO BANK and EAST AFRICAN
If you would invest 325,000 in EAST AFRICAN BREWERIES on November 4, 2024 and sell it today you would earn a total of 31,000 from holding EAST AFRICAN BREWERIES or generate 9.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MAENDELEO BANK PLC vs. EAST AFRICAN BREWERIES
Performance |
| Timeline |
| MAENDELEO BANK PLC |
| EAST AFRICAN BREWERIES |
MAENDELEO BANK and EAST AFRICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAENDELEO BANK and EAST AFRICAN
The main advantage of trading using opposite MAENDELEO BANK and EAST AFRICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAENDELEO BANK position performs unexpectedly, EAST AFRICAN 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 EAST AFRICAN will offset losses from the drop in EAST AFRICAN's long position.| MAENDELEO BANK vs. YETU MICROFINANCE PLC | MAENDELEO BANK vs. CRDB BANK LTD | MAENDELEO BANK vs. NATION MEDIA GROUP | MAENDELEO BANK vs. MWALIMU MERCIAL BANK |
| EAST AFRICAN vs. YETU MICROFINANCE PLC | EAST AFRICAN vs. CRDB BANK LTD | EAST AFRICAN vs. NATION MEDIA GROUP | EAST AFRICAN 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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