Correlation Between MUA and AFREXIMBANK
Can any of the company-specific risk be diversified away by investing in both MUA and AFREXIMBANK 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 MUA and AFREXIMBANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MUA LTD and AFREXIMBANK, you can compare the effects of market volatilities on MUA and AFREXIMBANK 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 MUA with a short position of AFREXIMBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of MUA and AFREXIMBANK.
Diversification Opportunities for MUA and AFREXIMBANK
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between MUA and AFREXIMBANK is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding MUA LTD and AFREXIMBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFREXIMBANK and MUA 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 MUA LTD are associated (or correlated) with AFREXIMBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFREXIMBANK has no effect on the direction of MUA i.e., MUA and AFREXIMBANK go up and down completely randomly.
Pair Corralation between MUA and AFREXIMBANK
Assuming the 90 days trading horizon MUA LTD is expected to generate 1.57 times more return on investment than AFREXIMBANK. However, MUA is 1.57 times more volatile than AFREXIMBANK. It trades about -0.12 of its potential returns per unit of risk. AFREXIMBANK is currently generating about -0.22 per unit of risk. If you would invest 5,950 in MUA LTD on October 24, 2024 and sell it today you would lose (100.00) from holding MUA LTD or give up 1.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
MUA LTD vs. AFREXIMBANK
Performance |
| Timeline |
| MUA LTD |
| AFREXIMBANK |
MUA and AFREXIMBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MUA and AFREXIMBANK
The main advantage of trading using opposite MUA and AFREXIMBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MUA position performs unexpectedly, AFREXIMBANK 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 AFREXIMBANK will offset losses from the drop in AFREXIMBANK's long position.The idea behind MUA LTD and AFREXIMBANK pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AFREXIMBANK vs. FINCORP INVESTMENT LTD | AFREXIMBANK vs. MCB GROUP LIMITED | AFREXIMBANK vs. MCB GROUP LTD | AFREXIMBANK vs. MUA LTD |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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