Correlation Between MALAWI PROPERTY and NBS BANK
Can any of the company-specific risk be diversified away by investing in both MALAWI PROPERTY and NBS BANK 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 MALAWI PROPERTY and NBS BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MALAWI PROPERTY INVESTMENT and NBS BANK LIMITED, you can compare the effects of market volatilities on MALAWI PROPERTY and NBS BANK 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 MALAWI PROPERTY with a short position of NBS BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of MALAWI PROPERTY and NBS BANK.
Diversification Opportunities for MALAWI PROPERTY and NBS BANK
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MALAWI and NBS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MALAWI PROPERTY INVESTMENT and NBS BANK LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBS BANK LIMITED and MALAWI PROPERTY 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 MALAWI PROPERTY INVESTMENT are associated (or correlated) with NBS BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBS BANK LIMITED has no effect on the direction of MALAWI PROPERTY i.e., MALAWI PROPERTY and NBS BANK go up and down completely randomly.
Pair Corralation between MALAWI PROPERTY and NBS BANK
Assuming the 90 days trading horizon MALAWI PROPERTY INVESTMENT is expected to under-perform the NBS BANK. But the stock apears to be less risky and, when comparing its historical volatility, MALAWI PROPERTY INVESTMENT is 2.23 times less risky than NBS BANK. The stock trades about -0.01 of its potential returns per unit of risk. The NBS BANK LIMITED is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 3,848 in NBS BANK LIMITED on November 2, 2024 and sell it today you would earn a total of 31,082 from holding NBS BANK LIMITED or generate 807.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
MALAWI PROPERTY INVESTMENT vs. NBS BANK LIMITED
Performance |
| Timeline |
| MALAWI PROPERTY INVE |
| NBS BANK LIMITED |
MALAWI PROPERTY and NBS BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MALAWI PROPERTY and NBS BANK
The main advantage of trading using opposite MALAWI PROPERTY and NBS BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MALAWI PROPERTY position performs unexpectedly, NBS BANK 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 NBS BANK will offset losses from the drop in NBS BANK's long position.| MALAWI PROPERTY vs. NATIONAL INVESTMENT TRUST | MALAWI PROPERTY vs. FDH BANK PLC | MALAWI PROPERTY vs. STANDARD BANK LIMITED | MALAWI PROPERTY vs. SUNBIRD HOTELS TOURISM |
| NBS BANK vs. NATIONAL INVESTMENT TRUST | NBS BANK vs. MALAWI PROPERTY INVESTMENT | NBS BANK vs. FDH BANK PLC | NBS BANK vs. STANDARD BANK LIMITED |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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