Correlation Between NATIONAL MICROFINANCE and DCB MERCIAL
Can any of the company-specific risk be diversified away by investing in both NATIONAL MICROFINANCE and DCB MERCIAL 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 NATIONAL MICROFINANCE and DCB MERCIAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NATIONAL MICROFINANCE BANK and DCB MERCIAL BANK, you can compare the effects of market volatilities on NATIONAL MICROFINANCE and DCB MERCIAL 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 NATIONAL MICROFINANCE with a short position of DCB MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL MICROFINANCE and DCB MERCIAL.
Diversification Opportunities for NATIONAL MICROFINANCE and DCB MERCIAL
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NATIONAL and DCB is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL MICROFINANCE BANK and DCB MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCB MERCIAL BANK and NATIONAL MICROFINANCE 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 NATIONAL MICROFINANCE BANK are associated (or correlated) with DCB MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCB MERCIAL BANK has no effect on the direction of NATIONAL MICROFINANCE i.e., NATIONAL MICROFINANCE and DCB MERCIAL go up and down completely randomly.
Pair Corralation between NATIONAL MICROFINANCE and DCB MERCIAL
Assuming the 90 days trading horizon NATIONAL MICROFINANCE BANK is expected to generate 0.39 times more return on investment than DCB MERCIAL. However, NATIONAL MICROFINANCE BANK is 2.56 times less risky than DCB MERCIAL. It trades about 0.09 of its potential returns per unit of risk. DCB MERCIAL BANK is currently generating about -0.18 per unit of risk. If you would invest 540,000 in NATIONAL MICROFINANCE BANK on October 26, 2024 and sell it today you would earn a total of 20,000 from holding NATIONAL MICROFINANCE BANK or generate 3.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NATIONAL MICROFINANCE BANK vs. DCB MERCIAL BANK
Performance |
| Timeline |
| NATIONAL MICROFINANCE |
| DCB MERCIAL BANK |
NATIONAL MICROFINANCE and DCB MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATIONAL MICROFINANCE and DCB MERCIAL
The main advantage of trading using opposite NATIONAL MICROFINANCE and DCB MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL MICROFINANCE position performs unexpectedly, DCB MERCIAL 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 DCB MERCIAL will offset losses from the drop in DCB MERCIAL's long position.| NATIONAL MICROFINANCE vs. YETU MICROFINANCE PLC | NATIONAL MICROFINANCE vs. MUCOBA BANK PLC | NATIONAL MICROFINANCE vs. TANZANIA PORTLAND CEMENT | NATIONAL MICROFINANCE vs. TOL GASES LTD |
| DCB MERCIAL vs. YETU MICROFINANCE PLC | DCB MERCIAL vs. MUCOBA BANK PLC | DCB MERCIAL vs. TANZANIA PORTLAND CEMENT | DCB MERCIAL vs. TOL GASES 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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