Correlation Between MAENDELEO BANK and MKOMBOZI MERCIAL
Can any of the company-specific risk be diversified away by investing in both MAENDELEO BANK and MKOMBOZI 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 MKOMBOZI 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 MKOMBOZI MERCIAL BANK, you can compare the effects of market volatilities on MAENDELEO BANK and MKOMBOZI 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 MKOMBOZI MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of MAENDELEO BANK and MKOMBOZI MERCIAL.
Diversification Opportunities for MAENDELEO BANK and MKOMBOZI MERCIAL
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between MAENDELEO and MKOMBOZI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding MAENDELEO BANK PLC and MKOMBOZI MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKOMBOZI 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 MKOMBOZI MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKOMBOZI MERCIAL BANK has no effect on the direction of MAENDELEO BANK i.e., MAENDELEO BANK and MKOMBOZI MERCIAL go up and down completely randomly.
Pair Corralation between MAENDELEO BANK and MKOMBOZI MERCIAL
Assuming the 90 days trading horizon MAENDELEO BANK PLC is expected to under-perform the MKOMBOZI MERCIAL. In addition to that, MAENDELEO BANK is 1.05 times more volatile than MKOMBOZI MERCIAL BANK. It trades about -0.21 of its total potential returns per unit of risk. MKOMBOZI MERCIAL BANK is currently generating about 0.07 per unit of volatility. If you would invest 54,000 in MKOMBOZI MERCIAL BANK on October 26, 2024 and sell it today you would earn a total of 2,000 from holding MKOMBOZI MERCIAL BANK or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MAENDELEO BANK PLC vs. MKOMBOZI MERCIAL BANK
Performance |
| Timeline |
| MAENDELEO BANK PLC |
| MKOMBOZI MERCIAL BANK |
MAENDELEO BANK and MKOMBOZI MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MAENDELEO BANK and MKOMBOZI MERCIAL
The main advantage of trading using opposite MAENDELEO BANK and MKOMBOZI MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MAENDELEO BANK position performs unexpectedly, MKOMBOZI 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 MKOMBOZI MERCIAL will offset losses from the drop in MKOMBOZI MERCIAL's long position.| MAENDELEO BANK vs. NATIONAL MICROFINANCE BANK | MAENDELEO BANK vs. KENYA MERCIAL BANK | MAENDELEO BANK vs. MWALIMU MERCIAL BANK | MAENDELEO BANK vs. MKOMBOZI MERCIAL BANK |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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