Correlation Between UCHUMI SUPERMARKET and KENYA RE

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Can any of the company-specific risk be diversified away by investing in both UCHUMI SUPERMARKET and KENYA RE 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 UCHUMI SUPERMARKET and KENYA RE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UCHUMI SUPERMARKET PLC and KENYA RE INSURANCE PORATION, you can compare the effects of market volatilities on UCHUMI SUPERMARKET and KENYA RE 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 UCHUMI SUPERMARKET with a short position of KENYA RE. Check out your portfolio center. Please also check ongoing floating volatility patterns of UCHUMI SUPERMARKET and KENYA RE.

Diversification Opportunities for UCHUMI SUPERMARKET and KENYA RE

-0.24
  Correlation Coefficient

Very good diversification

The 3 months correlation between UCHUMI and KENYA is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding UCHUMI SUPERMARKET PLC and KENYA RE INSURANCE PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KENYA RE INSURANCE and UCHUMI SUPERMARKET 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 UCHUMI SUPERMARKET PLC are associated (or correlated) with KENYA RE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KENYA RE INSURANCE has no effect on the direction of UCHUMI SUPERMARKET i.e., UCHUMI SUPERMARKET and KENYA RE go up and down completely randomly.

Pair Corralation between UCHUMI SUPERMARKET and KENYA RE

Assuming the 90 days trading horizon UCHUMI SUPERMARKET PLC is expected to generate 1.25 times more return on investment than KENYA RE. However, UCHUMI SUPERMARKET is 1.25 times more volatile than KENYA RE INSURANCE PORATION. It trades about 0.01 of its potential returns per unit of risk. KENYA RE INSURANCE PORATION is currently generating about -0.01 per unit of risk. If you would invest  25.00  in UCHUMI SUPERMARKET PLC on September 4, 2024 and sell it today you would lose (4.00) from holding UCHUMI SUPERMARKET PLC or give up 16.0% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

UCHUMI SUPERMARKET PLC  vs.  KENYA RE INSURANCE PORATION

 Performance 
       Timeline  
UCHUMI SUPERMARKET PLC 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in UCHUMI SUPERMARKET PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, UCHUMI SUPERMARKET sustained solid returns over the last few months and may actually be approaching a breakup point.
KENYA RE INSURANCE 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in KENYA RE INSURANCE PORATION are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, KENYA RE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

UCHUMI SUPERMARKET and KENYA RE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with UCHUMI SUPERMARKET and KENYA RE

The main advantage of trading using opposite UCHUMI SUPERMARKET and KENYA RE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UCHUMI SUPERMARKET position performs unexpectedly, KENYA RE 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 KENYA RE will offset losses from the drop in KENYA RE's long position.
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The idea behind UCHUMI SUPERMARKET PLC and KENYA RE INSURANCE PORATION pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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