Correlation Between TANZANIA PORTLAND and NATIONAL MICROFINANCE
Can any of the company-specific risk be diversified away by investing in both TANZANIA PORTLAND 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 TANZANIA PORTLAND and NATIONAL MICROFINANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TANZANIA PORTLAND CEMENT and NATIONAL MICROFINANCE BANK, you can compare the effects of market volatilities on TANZANIA PORTLAND 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 TANZANIA PORTLAND with a short position of NATIONAL MICROFINANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of TANZANIA PORTLAND and NATIONAL MICROFINANCE.
Diversification Opportunities for TANZANIA PORTLAND and NATIONAL MICROFINANCE
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TANZANIA and NATIONAL is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding TANZANIA PORTLAND CEMENT and NATIONAL MICROFINANCE BANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL MICROFINANCE and TANZANIA PORTLAND 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 TANZANIA PORTLAND CEMENT 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 TANZANIA PORTLAND i.e., TANZANIA PORTLAND and NATIONAL MICROFINANCE go up and down completely randomly.
Pair Corralation between TANZANIA PORTLAND and NATIONAL MICROFINANCE
Assuming the 90 days trading horizon TANZANIA PORTLAND is expected to generate 2.15 times less return on investment than NATIONAL MICROFINANCE. But when comparing it to its historical volatility, TANZANIA PORTLAND CEMENT is 1.45 times less risky than NATIONAL MICROFINANCE. It trades about 0.21 of its potential returns per unit of risk. NATIONAL MICROFINANCE BANK is currently generating about 0.32 of returns per unit of risk over similar time horizon. 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
TANZANIA PORTLAND CEMENT vs. NATIONAL MICROFINANCE BANK
Performance |
| Timeline |
| TANZANIA PORTLAND CEMENT |
| NATIONAL MICROFINANCE |
TANZANIA PORTLAND and NATIONAL MICROFINANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TANZANIA PORTLAND and NATIONAL MICROFINANCE
The main advantage of trading using opposite TANZANIA PORTLAND and NATIONAL MICROFINANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TANZANIA PORTLAND 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.| TANZANIA PORTLAND vs. TANZANIA CIGARETTE LTD | TANZANIA PORTLAND vs. AFRIPRISE INVESTMENT PLC | TANZANIA PORTLAND vs. KENYA MERCIAL BANK | TANZANIA PORTLAND vs. NATIONAL MICROFINANCE BANK |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
Other Complementary Tools
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |