Correlation Between AIRTEL AFRICA and GREENWICH ASSET

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

By analyzing existing cross correlation between AIRTEL AFRICA PLC and GREENWICH ASSET ETF, you can compare the effects of market volatilities on AIRTEL AFRICA and GREENWICH ASSET 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 AIRTEL AFRICA with a short position of GREENWICH ASSET. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIRTEL AFRICA and GREENWICH ASSET.

Diversification Opportunities for AIRTEL AFRICA and GREENWICH ASSET

0.83

Correlation Coefficient

AIRTEL AFRICA  GREENWICH ASSET

Very poor diversification

The 3 months correlation between AIRTEL and GREENWICH is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AIRTEL AFRICA PLC and GREENWICH ASSET ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENWICH ASSET ETF and AIRTEL AFRICA 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 AIRTEL AFRICA PLC are associated (or correlated) with GREENWICH ASSET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENWICH ASSET ETF has no effect on the direction of AIRTEL AFRICA i.e., AIRTEL AFRICA and GREENWICH ASSET go up and down completely randomly.

Pair Corralation between AIRTEL AFRICA and GREENWICH ASSET

Assuming the 90 days trading horizon AIRTEL AFRICA PLC is expected to generate 0.07 times more return on investment than GREENWICH ASSET. However, AIRTEL AFRICA PLC is 15.33 times less risky than GREENWICH ASSET. It trades about -0.13 of its potential returns per unit of risk. GREENWICH ASSET ETF is currently generating about -0.17 per unit of risk. If you would invest  220,000  in AIRTEL AFRICA PLC on September 5, 2024 and sell it today you would lose (4,310) from holding AIRTEL AFRICA PLC or give up 1.96% of portfolio value over 90 days.

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

AIRTEL AFRICA PLC  vs.  GREENWICH ASSET ETF

AIRTEL AFRICA PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIRTEL AFRICA PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, AIRTEL AFRICA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

GREENWICH ASSET ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GREENWICH ASSET ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Pair Trading with AIRTEL AFRICA and GREENWICH ASSET

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

The idea behind AIRTEL AFRICA PLC and GREENWICH ASSET ETF 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.