Correlation Between MTN GHANA and ECOBANK GHANA
Can any of the company-specific risk be diversified away by investing in both MTN GHANA and ECOBANK GHANA 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 MTN GHANA and ECOBANK GHANA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTN GHANA LTD and ECOBANK GHANA LIMITED, you can compare the effects of market volatilities on MTN GHANA and ECOBANK GHANA 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 MTN GHANA with a short position of ECOBANK GHANA. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN GHANA and ECOBANK GHANA.
Diversification Opportunities for MTN GHANA and ECOBANK GHANA
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTN and ECOBANK is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MTN GHANA LTD and ECOBANK GHANA LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECOBANK GHANA LIMITED and MTN GHANA 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 MTN GHANA LTD are associated (or correlated) with ECOBANK GHANA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECOBANK GHANA LIMITED has no effect on the direction of MTN GHANA i.e., MTN GHANA and ECOBANK GHANA go up and down completely randomly.
Pair Corralation between MTN GHANA and ECOBANK GHANA
Assuming the 90 days trading horizon MTN GHANA LTD is expected to generate 1.02 times more return on investment than ECOBANK GHANA. However, MTN GHANA is 1.02 times more volatile than ECOBANK GHANA LIMITED. It trades about 0.13 of its potential returns per unit of risk. ECOBANK GHANA LIMITED is currently generating about 0.01 per unit of risk. If you would invest 88.00 in MTN GHANA LTD on August 27, 2024 and sell it today you would earn a total of 148.00 from holding MTN GHANA LTD or generate 168.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTN GHANA LTD vs. ECOBANK GHANA LIMITED
Performance |
| Timeline |
| MTN GHANA LTD |
| ECOBANK GHANA LIMITED |
MTN GHANA and ECOBANK GHANA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN GHANA and ECOBANK GHANA
The main advantage of trading using opposite MTN GHANA and ECOBANK GHANA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN GHANA position performs unexpectedly, ECOBANK GHANA 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 ECOBANK GHANA will offset losses from the drop in ECOBANK GHANA's long position.| MTN GHANA vs. SIC INSURANCE ANY | MTN GHANA vs. ECOBANK GHANA LIMITED | MTN GHANA vs. SAMBA FOODS LIMITED | MTN GHANA vs. GUINNESS GHANA BREWERIES |
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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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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