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
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NATION and NATIONAL is -0.64. 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 GROUP is expected to under-perform the NATIONAL MICROFINANCE. In addition to that, NATION MEDIA is 19.07 times more volatile than NATIONAL MICROFINANCE BANK. It trades about -0.25 of its total potential returns per unit of risk. NATIONAL MICROFINANCE BANK is currently generating about -0.22 per unit of volatility. If you would invest 540,000 in NATIONAL MICROFINANCE BANK on August 28, 2024 and sell it today you would lose (5,000) from holding NATIONAL MICROFINANCE BANK or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| 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. EAST AFRICAN BREWERIES | NATION MEDIA vs. NATIONAL MICROFINANCE BANK | NATION MEDIA vs. UCHUMI SUPERMARKET LTD | NATION MEDIA vs. MUCOBA BANK PLC |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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