Correlation Between NATION MEDIA and EAST AFRICAN
Can any of the company-specific risk be diversified away by investing in both NATION MEDIA and EAST AFRICAN 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 NATION MEDIA and EAST AFRICAN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NATION MEDIA GROUP and EAST AFRICAN BREWERIES, you can compare the effects of market volatilities on NATION MEDIA and EAST AFRICAN 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 NATION MEDIA with a short position of EAST AFRICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATION MEDIA and EAST AFRICAN.
Diversification Opportunities for NATION MEDIA and EAST AFRICAN
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NATION and EAST is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding NATION MEDIA GROUP and EAST AFRICAN BREWERIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST AFRICAN BREWERIES and NATION MEDIA 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 NATION MEDIA GROUP are associated (or correlated) with EAST AFRICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST AFRICAN BREWERIES has no effect on the direction of NATION MEDIA i.e., NATION MEDIA and EAST AFRICAN go up and down completely randomly.
Pair Corralation between NATION MEDIA and EAST AFRICAN
Assuming the 90 days trading horizon NATION MEDIA is expected to generate 41.37 times less return on investment than EAST AFRICAN. But when comparing it to its historical volatility, NATION MEDIA GROUP is 1.33 times less risky than EAST AFRICAN. It trades about 0.0 of its potential returns per unit of risk. EAST AFRICAN BREWERIES is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 182,000 in EAST AFRICAN BREWERIES on September 5, 2024 and sell it today you would earn a total of 151,000 from holding EAST AFRICAN BREWERIES or generate 82.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NATION MEDIA GROUP vs. EAST AFRICAN BREWERIES
Performance |
| Timeline |
| NATION MEDIA GROUP |
| EAST AFRICAN BREWERIES |
NATION MEDIA and EAST AFRICAN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATION MEDIA and EAST AFRICAN
The main advantage of trading using opposite NATION MEDIA and EAST AFRICAN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATION MEDIA position performs unexpectedly, EAST AFRICAN 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 EAST AFRICAN will offset losses from the drop in EAST AFRICAN's long position.| NATION MEDIA vs. YETU MICROFINANCE PLC | NATION MEDIA vs. CRDB BANK LTD | NATION MEDIA vs. AFRIPRISE INVESTMENT PLC | NATION MEDIA vs. PRECISION AIR SERVICES |
| EAST AFRICAN vs. YETU MICROFINANCE PLC | EAST AFRICAN vs. CRDB BANK LTD | EAST AFRICAN vs. NATION MEDIA GROUP | EAST AFRICAN 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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