Correlation Between NATIONAL MICROFINANCE and NATION MEDIA
Can any of the company-specific risk be diversified away by investing in both NATIONAL MICROFINANCE and NATION MEDIA 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 NATION MEDIA 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 NATION MEDIA GROUP, you can compare the effects of market volatilities on NATIONAL MICROFINANCE and NATION MEDIA 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 NATION MEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL MICROFINANCE and NATION MEDIA.
Diversification Opportunities for NATIONAL MICROFINANCE and NATION MEDIA
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NATIONAL and NATION is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL MICROFINANCE BANK and NATION MEDIA GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATION MEDIA GROUP 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 NATION MEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATION MEDIA GROUP has no effect on the direction of NATIONAL MICROFINANCE i.e., NATIONAL MICROFINANCE and NATION MEDIA go up and down completely randomly.
Pair Corralation between NATIONAL MICROFINANCE and NATION MEDIA
Assuming the 90 days trading horizon NATIONAL MICROFINANCE BANK is expected to generate 0.45 times more return on investment than NATION MEDIA. However, NATIONAL MICROFINANCE BANK is 2.24 times less risky than NATION MEDIA. It trades about 0.32 of its potential returns per unit of risk. NATION MEDIA GROUP is currently generating about 0.01 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NATIONAL MICROFINANCE BANK vs. NATION MEDIA GROUP
Performance |
| Timeline |
| NATIONAL MICROFINANCE |
| NATION MEDIA GROUP |
NATIONAL MICROFINANCE and NATION MEDIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATIONAL MICROFINANCE and NATION MEDIA
The main advantage of trading using opposite NATIONAL MICROFINANCE and NATION MEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL MICROFINANCE position performs unexpectedly, NATION MEDIA 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 NATION MEDIA will offset losses from the drop in NATION MEDIA'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 |
| NATION MEDIA vs. YETU MICROFINANCE PLC | NATION MEDIA vs. CRDB BANK LTD | NATION MEDIA vs. MWALIMU MERCIAL BANK | NATION MEDIA vs. AFRIPRISE INVESTMENT PLC |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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