Correlation Between NBS BANK and NICO HOLDINGS
Can any of the company-specific risk be diversified away by investing in both NBS BANK and NICO HOLDINGS 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 NICO HOLDINGS 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 NICO HOLDINGS LIMITED, you can compare the effects of market volatilities on NBS BANK and NICO HOLDINGS 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 NICO HOLDINGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBS BANK and NICO HOLDINGS.
Diversification Opportunities for NBS BANK and NICO HOLDINGS
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NBS and NICO is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding NBS BANK LIMITED and NICO HOLDINGS LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICO HOLDINGS LIMITED 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 NICO HOLDINGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICO HOLDINGS LIMITED has no effect on the direction of NBS BANK i.e., NBS BANK and NICO HOLDINGS go up and down completely randomly.
Pair Corralation between NBS BANK and NICO HOLDINGS
Assuming the 90 days trading horizon NBS BANK LIMITED is expected to generate 4218.5 times more return on investment than NICO HOLDINGS. However, NBS BANK is 4218.5 times more volatile than NICO HOLDINGS LIMITED. It trades about 0.63 of its potential returns per unit of risk. NICO HOLDINGS LIMITED is currently generating about -0.19 per unit of risk. If you would invest 15,201 in NBS BANK LIMITED on October 21, 2024 and sell it today you would earn a total of 15,965 from holding NBS BANK LIMITED or generate 105.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBS BANK LIMITED vs. NICO HOLDINGS LIMITED
Performance |
| Timeline |
| NBS BANK LIMITED |
| NICO HOLDINGS LIMITED |
NBS BANK and NICO HOLDINGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBS BANK and NICO HOLDINGS
The main advantage of trading using opposite NBS BANK and NICO HOLDINGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBS BANK position performs unexpectedly, NICO HOLDINGS 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 NICO HOLDINGS will offset losses from the drop in NICO HOLDINGS's long position.| NBS BANK vs. AIRTEL MALAWI PLC | NBS BANK vs. STANDARD BANK LIMITED | NBS BANK vs. SUNBIRD HOTELS TOURISM | NBS BANK vs. MALAWI PROPERTY INVESTMENT |
| NICO HOLDINGS vs. AIRTEL MALAWI PLC | NICO HOLDINGS vs. STANDARD BANK LIMITED | NICO HOLDINGS vs. NBS BANK LIMITED | NICO HOLDINGS vs. SUNBIRD HOTELS TOURISM |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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