Correlation Between NICO HOLDINGS and MALAWI PROPERTY
Can any of the company-specific risk be diversified away by investing in both NICO HOLDINGS and MALAWI PROPERTY 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 NICO HOLDINGS and MALAWI PROPERTY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NICO HOLDINGS LIMITED and MALAWI PROPERTY INVESTMENT, you can compare the effects of market volatilities on NICO HOLDINGS and MALAWI PROPERTY 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 NICO HOLDINGS with a short position of MALAWI PROPERTY. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICO HOLDINGS and MALAWI PROPERTY.
Diversification Opportunities for NICO HOLDINGS and MALAWI PROPERTY
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NICO and MALAWI is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding NICO HOLDINGS LIMITED and MALAWI PROPERTY INVESTMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MALAWI PROPERTY INVE and NICO HOLDINGS 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 NICO HOLDINGS LIMITED are associated (or correlated) with MALAWI PROPERTY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MALAWI PROPERTY INVE has no effect on the direction of NICO HOLDINGS i.e., NICO HOLDINGS and MALAWI PROPERTY go up and down completely randomly.
Pair Corralation between NICO HOLDINGS and MALAWI PROPERTY
Assuming the 90 days trading horizon NICO HOLDINGS LIMITED is expected to generate 391.04 times more return on investment than MALAWI PROPERTY. However, NICO HOLDINGS is 391.04 times more volatile than MALAWI PROPERTY INVESTMENT. It trades about 0.57 of its potential returns per unit of risk. MALAWI PROPERTY INVESTMENT is currently generating about 0.21 per unit of risk. If you would invest 41,902 in NICO HOLDINGS LIMITED on November 28, 2024 and sell it today you would earn a total of 30,369 from holding NICO HOLDINGS LIMITED or generate 72.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
NICO HOLDINGS LIMITED vs. MALAWI PROPERTY INVESTMENT
Performance |
| Timeline |
| NICO HOLDINGS LIMITED |
| MALAWI PROPERTY INVE |
NICO HOLDINGS and MALAWI PROPERTY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICO HOLDINGS and MALAWI PROPERTY
The main advantage of trading using opposite NICO HOLDINGS and MALAWI PROPERTY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICO HOLDINGS position performs unexpectedly, MALAWI PROPERTY 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 MALAWI PROPERTY will offset losses from the drop in MALAWI PROPERTY's long position.| NICO HOLDINGS vs. STANDARD BANK LIMITED | NICO HOLDINGS vs. NBS BANK LIMITED | NICO HOLDINGS vs. SUNBIRD HOTELS TOURISM | NICO HOLDINGS vs. MALAWI PROPERTY INVESTMENT |
| MALAWI PROPERTY vs. STANDARD BANK LIMITED | MALAWI PROPERTY vs. NBS BANK LIMITED | MALAWI PROPERTY vs. SUNBIRD HOTELS TOURISM | MALAWI PROPERTY vs. ILLOVO SUGAR 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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