Correlation Between NATIONAL MICROFINANCE and MKOMBOZI MERCIAL
Can any of the company-specific risk be diversified away by investing in both NATIONAL MICROFINANCE and MKOMBOZI 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 MKOMBOZI 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 MKOMBOZI MERCIAL BANK, you can compare the effects of market volatilities on NATIONAL MICROFINANCE and MKOMBOZI 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 MKOMBOZI MERCIAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL MICROFINANCE and MKOMBOZI MERCIAL.
Diversification Opportunities for NATIONAL MICROFINANCE and MKOMBOZI MERCIAL
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NATIONAL and MKOMBOZI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL MICROFINANCE BANK and MKOMBOZI MERCIAL BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKOMBOZI 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 MKOMBOZI MERCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKOMBOZI MERCIAL BANK has no effect on the direction of NATIONAL MICROFINANCE i.e., NATIONAL MICROFINANCE and MKOMBOZI MERCIAL go up and down completely randomly.
Pair Corralation between NATIONAL MICROFINANCE and MKOMBOZI MERCIAL
Assuming the 90 days trading horizon NATIONAL MICROFINANCE BANK is expected to generate 0.85 times more return on investment than MKOMBOZI MERCIAL. However, NATIONAL MICROFINANCE BANK is 1.17 times less risky than MKOMBOZI MERCIAL. It trades about 0.32 of its potential returns per unit of risk. MKOMBOZI MERCIAL BANK is currently generating about 0.13 per unit of risk. If you would invest 535,000 in NATIONAL MICROFINANCE BANK on November 4, 2024 and sell it today you would earn a total of 50,000 from holding NATIONAL MICROFINANCE BANK or generate 9.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 85.71% |
| Values | Daily Returns |
NATIONAL MICROFINANCE BANK vs. MKOMBOZI MERCIAL BANK
Performance |
| Timeline |
| NATIONAL MICROFINANCE |
| MKOMBOZI MERCIAL BANK |
NATIONAL MICROFINANCE and MKOMBOZI MERCIAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATIONAL MICROFINANCE and MKOMBOZI MERCIAL
The main advantage of trading using opposite NATIONAL MICROFINANCE and MKOMBOZI MERCIAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL MICROFINANCE position performs unexpectedly, MKOMBOZI 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 MKOMBOZI MERCIAL will offset losses from the drop in MKOMBOZI 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 |
| MKOMBOZI MERCIAL vs. YETU MICROFINANCE PLC | MKOMBOZI MERCIAL vs. CRDB BANK LTD | MKOMBOZI MERCIAL vs. NATION MEDIA GROUP | MKOMBOZI 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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