Correlation Between MAENDELEO BANK and KENYA MERCIAL
Can any of the company-specific risk be diversified away by investing in both MAENDELEO BANK and KENYA MERCIAL 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 KENYA MERCIAL 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 KENYA MERCIAL BANK, you can compare the effects of market volatilities on MAENDELEO BANK and KENYA MERCIAL 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 KENYA MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAENDELEO BANK and KENYA MERCIAL.
Diversification Opportunities for MAENDELEO BANK and KENYA MERCIAL
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MAENDELEO and KENYA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding MAENDELEO BANK PLC and KENYA MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENYA MERCIAL BANK 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 KENYA MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENYA MERCIAL BANK has no effect on the direction of MAENDELEO BANK i.e., MAENDELEO BANK and KENYA MERCIAL go up and down completely randomly.
Pair Corralation between MAENDELEO BANK and KENYA MERCIAL
Assuming the 90 days trading horizon MAENDELEO BANK is expected to generate 7.19 times less return on investment than KENYA MERCIAL. But when comparing it to its historical volatility, MAENDELEO BANK PLC is 1.31 times less risky than KENYA MERCIAL. It trades about 0.03 of its potential returns per unit of risk. KENYA MERCIAL BANK is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 63,000 in KENYA MERCIAL BANK on November 4, 2024 and sell it today you would earn a total of 23,000 from holding KENYA MERCIAL BANK or generate 36.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAENDELEO BANK PLC vs. KENYA MERCIAL BANK
Performance |
| Timeline |
| MAENDELEO BANK PLC |
| KENYA MERCIAL BANK |
MAENDELEO BANK and KENYA MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAENDELEO BANK and KENYA MERCIAL
The main advantage of trading using opposite MAENDELEO BANK and KENYA MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAENDELEO BANK position performs unexpectedly, KENYA MERCIAL 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 MERCIAL will offset losses from the drop in KENYA MERCIAL'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 |
| KENYA MERCIAL vs. YETU MICROFINANCE PLC | KENYA MERCIAL vs. CRDB BANK LTD | KENYA MERCIAL vs. NATION MEDIA GROUP | KENYA MERCIAL 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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