Correlation Between NBS BANK and BLANTYRE HOTELS
Can any of the company-specific risk be diversified away by investing in both NBS BANK and BLANTYRE HOTELS 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 NBS BANK and BLANTYRE HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBS BANK LIMITED and BLANTYRE HOTELS LIMITED, you can compare the effects of market volatilities on NBS BANK and BLANTYRE HOTELS 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 NBS BANK with a short position of BLANTYRE HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBS BANK and BLANTYRE HOTELS.
Diversification Opportunities for NBS BANK and BLANTYRE HOTELS
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NBS and BLANTYRE is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding NBS BANK LIMITED and BLANTYRE HOTELS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BLANTYRE HOTELS and NBS BANK 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 NBS BANK LIMITED are associated (or correlated) with BLANTYRE HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BLANTYRE HOTELS has no effect on the direction of NBS BANK i.e., NBS BANK and BLANTYRE HOTELS go up and down completely randomly.
Pair Corralation between NBS BANK and BLANTYRE HOTELS
Assuming the 90 days trading horizon NBS BANK LIMITED is expected to generate 2.11 times more return on investment than BLANTYRE HOTELS. However, NBS BANK is 2.11 times more volatile than BLANTYRE HOTELS LIMITED. It trades about 0.08 of its potential returns per unit of risk. BLANTYRE HOTELS LIMITED is currently generating about 0.1 per unit of risk. If you would invest 8,841 in NBS BANK LIMITED on September 2, 2024 and sell it today you would earn a total of 6,357 from holding NBS BANK LIMITED or generate 71.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBS BANK LIMITED vs. BLANTYRE HOTELS LIMITED
Performance |
| Timeline |
| NBS BANK LIMITED |
| BLANTYRE HOTELS |
NBS BANK and BLANTYRE HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBS BANK and BLANTYRE HOTELS
The main advantage of trading using opposite NBS BANK and BLANTYRE HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBS BANK position performs unexpectedly, BLANTYRE HOTELS 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 BLANTYRE HOTELS will offset losses from the drop in BLANTYRE HOTELS's long position.| NBS BANK vs. MALAWI PROPERTY INVESTMENT | NBS BANK vs. STANDARD BANK LIMITED | NBS BANK vs. SUNBIRD HOTELS TOURISM | NBS BANK vs. FDH BANK PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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