Correlation Between MALAWI PROPERTY and NICO HOLDINGS
Can any of the company-specific risk be diversified away by investing in both MALAWI PROPERTY and NICO HOLDINGS 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 NICO HOLDINGS 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 NICO HOLDINGS LIMITED, you can compare the effects of market volatilities on MALAWI PROPERTY and NICO HOLDINGS 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 NICO HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MALAWI PROPERTY and NICO HOLDINGS.
Diversification Opportunities for MALAWI PROPERTY and NICO HOLDINGS
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MALAWI and NICO is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding MALAWI PROPERTY INVESTMENT and NICO HOLDINGS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICO HOLDINGS 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 NICO HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICO HOLDINGS LIMITED has no effect on the direction of MALAWI PROPERTY i.e., MALAWI PROPERTY and NICO HOLDINGS go up and down completely randomly.
Pair Corralation between MALAWI PROPERTY and NICO HOLDINGS
Assuming the 90 days trading horizon MALAWI PROPERTY is expected to generate 1034.88 times less return on investment than NICO HOLDINGS. But when comparing it to its historical volatility, MALAWI PROPERTY INVESTMENT is 391.04 times less risky than NICO HOLDINGS. It trades about 0.21 of its potential returns per unit of risk. NICO HOLDINGS LIMITED is currently generating about 0.57 of returns per unit of risk over similar time horizon. If you would invest 41,902 in NICO HOLDINGS LIMITED on November 28, 2024 and sell it today you would earn a total of 30,369 from holding NICO HOLDINGS LIMITED or generate 72.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MALAWI PROPERTY INVESTMENT vs. NICO HOLDINGS LIMITED
Performance |
| Timeline |
| MALAWI PROPERTY INVE |
| NICO HOLDINGS LIMITED |
MALAWI PROPERTY and NICO HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MALAWI PROPERTY and NICO HOLDINGS
The main advantage of trading using opposite MALAWI PROPERTY and NICO HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MALAWI PROPERTY position performs unexpectedly, NICO HOLDINGS 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 NICO HOLDINGS will offset losses from the drop in NICO HOLDINGS's long position.| MALAWI PROPERTY vs. STANDARD BANK LIMITED | MALAWI PROPERTY vs. NBS BANK LIMITED | MALAWI PROPERTY vs. SUNBIRD HOTELS TOURISM | MALAWI PROPERTY vs. ILLOVO SUGAR LIMITED |
| NICO HOLDINGS vs. STANDARD BANK LIMITED | NICO HOLDINGS vs. NBS BANK LIMITED | NICO HOLDINGS vs. SUNBIRD HOTELS TOURISM | NICO HOLDINGS vs. MALAWI PROPERTY INVESTMENT |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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