Correlation Between AFREXIMBANK and NATIONAL INVESTMENT

Can any of the company-specific risk be diversified away by investing in both AFREXIMBANK and NATIONAL INVESTMENT 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 AFREXIMBANK and NATIONAL INVESTMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AFREXIMBANK and NATIONAL INVESTMENT TRUST, you can compare the effects of market volatilities on AFREXIMBANK and NATIONAL INVESTMENT 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 AFREXIMBANK with a short position of NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFREXIMBANK and NATIONAL INVESTMENT.

Diversification Opportunities for AFREXIMBANK and NATIONAL INVESTMENT

0.09

Correlation Coefficient

AFREXIMBANK  NATIONAL INVESTMENT

Significant diversification

The 3 months correlation between AFREXIMBANK and NATIONAL is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding AFREXIMBANK and NATIONAL INVESTMENT TRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT TRUST and AFREXIMBANK 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 AFREXIMBANK are associated (or correlated) with NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT TRUST has no effect on the direction of AFREXIMBANK i.e., AFREXIMBANK and NATIONAL INVESTMENT go up and down completely randomly.

Pair Corralation between AFREXIMBANK and NATIONAL INVESTMENT

Assuming the 90 days trading horizon AFREXIMBANK is expected to generate 0.48 times more return on investment than NATIONAL INVESTMENT. However, AFREXIMBANK is 2.08 times less risky than NATIONAL INVESTMENT. It trades about 0.0 of its potential returns per unit of risk. NATIONAL INVESTMENT TRUST is currently generating about -0.07 per unit of risk. If you would invest  270.00  in AFREXIMBANK on October 25, 2024 and sell it today you would lose (4.00) from holding AFREXIMBANK or give up 1.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AFREXIMBANK  vs.  NATIONAL INVESTMENT TRUST

AFREXIMBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFREXIMBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AFREXIMBANK is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL INVESTMENT TRUST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AFREXIMBANK and NATIONAL INVESTMENT

The main advantage of trading using opposite AFREXIMBANK and NATIONAL INVESTMENT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AFREXIMBANK position performs unexpectedly, NATIONAL INVESTMENT 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 INVESTMENT will offset losses from the drop in NATIONAL INVESTMENT's long position.

The idea behind AFREXIMBANK and NATIONAL INVESTMENT TRUST 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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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.