Correlation Between NATIONAL MICROFINANCE and KENYA MERCIAL
Can any of the company-specific risk be diversified away by investing in both NATIONAL MICROFINANCE and KENYA 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 KENYA 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 KENYA MERCIAL BANK, you can compare the effects of market volatilities on NATIONAL MICROFINANCE and KENYA 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 KENYA MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL MICROFINANCE and KENYA MERCIAL.
Diversification Opportunities for NATIONAL MICROFINANCE and KENYA MERCIAL
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NATIONAL and KENYA is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL MICROFINANCE BANK and KENYA MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENYA 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 KENYA MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENYA MERCIAL BANK has no effect on the direction of NATIONAL MICROFINANCE i.e., NATIONAL MICROFINANCE and KENYA MERCIAL go up and down completely randomly.
Pair Corralation between NATIONAL MICROFINANCE and KENYA MERCIAL
Assuming the 90 days trading horizon NATIONAL MICROFINANCE is expected to generate 1.11 times less return on investment than KENYA MERCIAL. In addition to that, NATIONAL MICROFINANCE is 1.06 times more volatile than KENYA MERCIAL BANK. It trades about 0.32 of its total potential returns per unit of risk. KENYA MERCIAL BANK is currently generating about 0.38 per unit of volatility. If you would invest 79,000 in KENYA MERCIAL BANK on November 5, 2024 and sell it today you would earn a total of 7,000 from holding KENYA MERCIAL BANK or generate 8.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.0% |
| Values | Daily Returns |
NATIONAL MICROFINANCE BANK vs. KENYA MERCIAL BANK
Performance |
| Timeline |
| NATIONAL MICROFINANCE |
| KENYA MERCIAL BANK |
NATIONAL MICROFINANCE and KENYA MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATIONAL MICROFINANCE and KENYA MERCIAL
The main advantage of trading using opposite NATIONAL MICROFINANCE and KENYA MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL MICROFINANCE position performs unexpectedly, KENYA 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 KENYA MERCIAL will offset losses from the drop in KENYA MERCIAL's long position.| NATIONAL MICROFINANCE vs. YETU MICROFINANCE PLC | NATIONAL MICROFINANCE vs. CRDB BANK LTD | NATIONAL MICROFINANCE vs. NATION MEDIA GROUP | NATIONAL MICROFINANCE vs. MWALIMU MERCIAL BANK |
| KENYA MERCIAL vs. YETU MICROFINANCE PLC | KENYA MERCIAL vs. CRDB BANK LTD | KENYA MERCIAL vs. NATION MEDIA GROUP | KENYA MERCIAL vs. MWALIMU MERCIAL BANK |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. |