Correlation Between MTN GHANA and REPUBLIC BANK
Can any of the company-specific risk be diversified away by investing in both MTN GHANA and REPUBLIC 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 MTN GHANA and REPUBLIC BANK 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 REPUBLIC BANK LIMITED, you can compare the effects of market volatilities on MTN GHANA and REPUBLIC 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 MTN GHANA with a short position of REPUBLIC BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN GHANA and REPUBLIC BANK.
Diversification Opportunities for MTN GHANA and REPUBLIC BANK
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MTN and REPUBLIC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MTN GHANA LTD and REPUBLIC BANK LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REPUBLIC BANK 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 REPUBLIC BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REPUBLIC BANK LIMITED has no effect on the direction of MTN GHANA i.e., MTN GHANA and REPUBLIC BANK go up and down completely randomly.
Pair Corralation between MTN GHANA and REPUBLIC BANK
Assuming the 90 days trading horizon MTN GHANA LTD is expected to generate 1.77 times more return on investment than REPUBLIC BANK. However, MTN GHANA is 1.77 times more volatile than REPUBLIC BANK LIMITED. It trades about 0.13 of its potential returns per unit of risk. REPUBLIC BANK LIMITED is currently generating about 0.02 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTN GHANA LTD vs. REPUBLIC BANK LIMITED
Performance |
| Timeline |
| MTN GHANA LTD |
| REPUBLIC BANK LIMITED |
MTN GHANA and REPUBLIC BANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN GHANA and REPUBLIC BANK
The main advantage of trading using opposite MTN GHANA and REPUBLIC BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN GHANA position performs unexpectedly, REPUBLIC 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 REPUBLIC BANK will offset losses from the drop in REPUBLIC BANK'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 |
| REPUBLIC BANK vs. GUINNESS GHANA BREWERIES | REPUBLIC BANK vs. SAMBA FOODS LIMITED | REPUBLIC BANK vs. AGRICULTURAL DEVELOPMENT BANK | REPUBLIC BANK vs. SIC INSURANCE ANY |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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