Correlation Between NATION MEDIA and NATIONAL MICROFINANCE
Can any of the company-specific risk be diversified away by investing in both NATION MEDIA and NATIONAL MICROFINANCE 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 NATIONAL MICROFINANCE 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 NATIONAL MICROFINANCE BANK, you can compare the effects of market volatilities on NATION MEDIA and NATIONAL MICROFINANCE 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 NATIONAL MICROFINANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATION MEDIA and NATIONAL MICROFINANCE.
Diversification Opportunities for NATION MEDIA and NATIONAL MICROFINANCE
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NATION and NATIONAL is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding NATION MEDIA GROUP and NATIONAL MICROFINANCE BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL MICROFINANCE 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 NATIONAL MICROFINANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL MICROFINANCE has no effect on the direction of NATION MEDIA i.e., NATION MEDIA and NATIONAL MICROFINANCE go up and down completely randomly.
Pair Corralation between NATION MEDIA and NATIONAL MICROFINANCE
Assuming the 90 days trading horizon NATION MEDIA is expected to generate 9.73 times less return on investment than NATIONAL MICROFINANCE. In addition to that, NATION MEDIA is 2.24 times more volatile than NATIONAL MICROFINANCE BANK. It trades about 0.01 of its total potential returns per unit of risk. NATIONAL MICROFINANCE BANK is currently generating about 0.32 per unit of volatility. 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 |
NATION MEDIA GROUP vs. NATIONAL MICROFINANCE BANK
Performance |
| Timeline |
| NATION MEDIA GROUP |
| NATIONAL MICROFINANCE |
NATION MEDIA and NATIONAL MICROFINANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATION MEDIA and NATIONAL MICROFINANCE
The main advantage of trading using opposite NATION MEDIA and NATIONAL MICROFINANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATION MEDIA position performs unexpectedly, NATIONAL MICROFINANCE 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 NATIONAL MICROFINANCE will offset losses from the drop in NATIONAL MICROFINANCE's long position.| NATION MEDIA vs. YETU MICROFINANCE PLC | NATION MEDIA vs. CRDB BANK LTD | NATION MEDIA vs. MWALIMU MERCIAL BANK | NATION MEDIA vs. AFRIPRISE INVESTMENT PLC |
| NATIONAL MICROFINANCE vs. YETU MICROFINANCE PLC | NATIONAL MICROFINANCE vs. CRDB BANK LTD | NATIONAL MICROFINANCE vs. NATION MEDIA GROUP | NATIONAL MICROFINANCE 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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