Correlation Between NATIONAL MICROFINANCE and SWISSPORT TANZANIA
Can any of the company-specific risk be diversified away by investing in both NATIONAL MICROFINANCE and SWISSPORT TANZANIA 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 SWISSPORT TANZANIA 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 SWISSPORT TANZANIA LTD, you can compare the effects of market volatilities on NATIONAL MICROFINANCE and SWISSPORT TANZANIA 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 SWISSPORT TANZANIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL MICROFINANCE and SWISSPORT TANZANIA.
Diversification Opportunities for NATIONAL MICROFINANCE and SWISSPORT TANZANIA
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between NATIONAL and SWISSPORT is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL MICROFINANCE BANK and SWISSPORT TANZANIA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SWISSPORT TANZANIA LTD 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 SWISSPORT TANZANIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SWISSPORT TANZANIA LTD has no effect on the direction of NATIONAL MICROFINANCE i.e., NATIONAL MICROFINANCE and SWISSPORT TANZANIA go up and down completely randomly.
Pair Corralation between NATIONAL MICROFINANCE and SWISSPORT TANZANIA
Assuming the 90 days trading horizon NATIONAL MICROFINANCE BANK is expected to generate 0.57 times more return on investment than SWISSPORT TANZANIA. However, NATIONAL MICROFINANCE BANK is 1.74 times less risky than SWISSPORT TANZANIA. It trades about 0.13 of its potential returns per unit of risk. SWISSPORT TANZANIA LTD is currently generating about -0.03 per unit of risk. If you would invest 364,000 in NATIONAL MICROFINANCE BANK on August 31, 2024 and sell it today you would earn a total of 171,000 from holding NATIONAL MICROFINANCE BANK or generate 46.98% 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. SWISSPORT TANZANIA LTD
Performance |
| Timeline |
| NATIONAL MICROFINANCE |
| SWISSPORT TANZANIA LTD |
NATIONAL MICROFINANCE and SWISSPORT TANZANIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATIONAL MICROFINANCE and SWISSPORT TANZANIA
The main advantage of trading using opposite NATIONAL MICROFINANCE and SWISSPORT TANZANIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATIONAL MICROFINANCE position performs unexpectedly, SWISSPORT TANZANIA 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 SWISSPORT TANZANIA will offset losses from the drop in SWISSPORT TANZANIA's long position.| NATIONAL MICROFINANCE vs. YETU MICROFINANCE PLC | NATIONAL MICROFINANCE vs. AFRIPRISE INVESTMENT PLC | NATIONAL MICROFINANCE vs. PRECISION AIR SERVICES | NATIONAL MICROFINANCE vs. MKOMBOZI MERCIAL BANK |
| SWISSPORT TANZANIA vs. AFRIPRISE INVESTMENT PLC | SWISSPORT TANZANIA vs. TANZANIA CIGARETTE LTD | SWISSPORT TANZANIA vs. TANZANIA BREWERIES LTD | SWISSPORT TANZANIA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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