Correlation Between MTN GHANA and SIC INSURANCE
Can any of the company-specific risk be diversified away by investing in both MTN GHANA and SIC INSURANCE 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 SIC INSURANCE 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 SIC INSURANCE ANY, you can compare the effects of market volatilities on MTN GHANA and SIC INSURANCE 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 SIC INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTN GHANA and SIC INSURANCE.
Diversification Opportunities for MTN GHANA and SIC INSURANCE
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTN and SIC is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding MTN GHANA LTD and SIC INSURANCE ANY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIC INSURANCE ANY 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 SIC INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIC INSURANCE ANY has no effect on the direction of MTN GHANA i.e., MTN GHANA and SIC INSURANCE go up and down completely randomly.
Pair Corralation between MTN GHANA and SIC INSURANCE
Assuming the 90 days trading horizon MTN GHANA is expected to generate 4.91 times less return on investment than SIC INSURANCE. But when comparing it to its historical volatility, MTN GHANA LTD is 2.09 times less risky than SIC INSURANCE. It trades about 0.19 of its potential returns per unit of risk. SIC INSURANCE ANY is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest 27.00 in SIC INSURANCE ANY on January 14, 2025 and sell it today you would earn a total of 33.00 from holding SIC INSURANCE ANY or generate 122.22% 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. SIC INSURANCE ANY
Performance |
| Timeline |
| MTN GHANA LTD |
| SIC INSURANCE ANY |
MTN GHANA and SIC INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTN GHANA and SIC INSURANCE
The main advantage of trading using opposite MTN GHANA and SIC INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTN GHANA position performs unexpectedly, SIC INSURANCE 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 SIC INSURANCE will offset losses from the drop in SIC INSURANCE's long position.| MTN GHANA vs. SIC INSURANCE ANY | MTN GHANA vs. GHANA MERCIAL BANK | MTN GHANA vs. ACCESS BANK GHANA | MTN GHANA vs. SAMBA FOODS LIMITED |
| SIC INSURANCE vs. AGRICULTURAL DEVELOPMENT BANK | SIC INSURANCE vs. DIGICUT ADVERTISING PRODUCTION | SIC INSURANCE vs. REPUBLIC BANK LIMITED | SIC INSURANCE vs. SAMBA FOODS 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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