Correlation Between NCBA GROUP and EQUITY GROUP
Can any of the company-specific risk be diversified away by investing in both NCBA GROUP and EQUITY GROUP 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 NCBA GROUP and EQUITY GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NCBA GROUP PLC and EQUITY GROUP HOLDINGS, you can compare the effects of market volatilities on NCBA GROUP and EQUITY GROUP 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 NCBA GROUP with a short position of EQUITY GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCBA GROUP and EQUITY GROUP.
Diversification Opportunities for NCBA GROUP and EQUITY GROUP
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NCBA and EQUITY is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding NCBA GROUP PLC and EQUITY GROUP HOLDINGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQUITY GROUP HOLDINGS and NCBA GROUP 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 NCBA GROUP PLC are associated (or correlated) with EQUITY GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQUITY GROUP HOLDINGS has no effect on the direction of NCBA GROUP i.e., NCBA GROUP and EQUITY GROUP go up and down completely randomly.
Pair Corralation between NCBA GROUP and EQUITY GROUP
Assuming the 90 days trading horizon NCBA GROUP PLC is expected to generate 1.84 times more return on investment than EQUITY GROUP. However, NCBA GROUP is 1.84 times more volatile than EQUITY GROUP HOLDINGS. It trades about -0.04 of its potential returns per unit of risk. EQUITY GROUP HOLDINGS is currently generating about -0.12 per unit of risk. If you would invest 4,310 in NCBA GROUP PLC on September 5, 2024 and sell it today you would lose (120.00) from holding NCBA GROUP PLC or give up 2.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NCBA GROUP PLC vs. EQUITY GROUP HOLDINGS
Performance |
| Timeline |
| NCBA GROUP PLC |
| EQUITY GROUP HOLDINGS |
NCBA GROUP and EQUITY GROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NCBA GROUP and EQUITY GROUP
The main advantage of trading using opposite NCBA GROUP and EQUITY GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCBA GROUP position performs unexpectedly, EQUITY GROUP 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 EQUITY GROUP will offset losses from the drop in EQUITY GROUP's long position.| NCBA GROUP vs. EQUITY GROUP HOLDINGS | NCBA GROUP vs. BRITISH AMERICAN TOBACCO | NCBA GROUP vs. CO OPERATIVE BANK OF | NCBA GROUP vs. ABSA NEW GOLD |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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