Correlation Between NATION MEDIA and UMEME
Can any of the company-specific risk be diversified away by investing in both NATION MEDIA and UMEME 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 UMEME 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 UMEME LIMITED, you can compare the effects of market volatilities on NATION MEDIA and UMEME 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 UMEME. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATION MEDIA and UMEME.
Diversification Opportunities for NATION MEDIA and UMEME
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NATION and UMEME is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding NATION MEDIA GROUP and UMEME LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UMEME LIMITED 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 UMEME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UMEME LIMITED has no effect on the direction of NATION MEDIA i.e., NATION MEDIA and UMEME go up and down completely randomly.
Pair Corralation between NATION MEDIA and UMEME
Assuming the 90 days trading horizon NATION MEDIA GROUP is expected to under-perform the UMEME. In addition to that, NATION MEDIA is 2.56 times more volatile than UMEME LIMITED. It trades about -0.22 of its total potential returns per unit of risk. UMEME LIMITED is currently generating about 0.09 per unit of volatility. If you would invest 41,000 in UMEME LIMITED on August 30, 2024 and sell it today you would earn a total of 1,000.00 from holding UMEME LIMITED or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NATION MEDIA GROUP vs. UMEME LIMITED
Performance |
| Timeline |
| NATION MEDIA GROUP |
| UMEME LIMITED |
NATION MEDIA and UMEME Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NATION MEDIA and UMEME
The main advantage of trading using opposite NATION MEDIA and UMEME positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NATION MEDIA position performs unexpectedly, UMEME 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 UMEME will offset losses from the drop in UMEME's long position.| NATION MEDIA vs. UMEME LIMITED | NATION MEDIA vs. AIRTEL UGANDA LIMITED | NATION MEDIA vs. QUALITY CHEMICAL INDUSTRIES | NATION MEDIA vs. STANBIC BANK HOLDINGS |
| UMEME vs. QUALITY CHEMICAL INDUSTRIES | UMEME vs. CENTUM INVESTMENT PANY | UMEME vs. BANK OF BARODA | UMEME vs. EAST AFRICAN BREWERIES |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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