Correlation Between AIRTEL AFRICA and INDUSTRIAL MEDICAL

Can any of the company-specific risk be diversified away by investing in both AIRTEL AFRICA and INDUSTRIAL MEDICAL 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 INDUSTRIAL MEDICAL 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 INDUSTRIAL MEDICAL GASES, you can compare the effects of market volatilities on AIRTEL AFRICA and INDUSTRIAL MEDICAL 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 INDUSTRIAL MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of AIRTEL AFRICA and INDUSTRIAL MEDICAL.

Diversification Opportunities for AIRTEL AFRICA and INDUSTRIAL MEDICAL

-0.84

Correlation Coefficient

AIRTEL AFRICA  INDUSTRIAL MEDICAL

Pay attention - limited upside

The 3 months correlation between AIRTEL and INDUSTRIAL is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding AIRTEL AFRICA PLC and INDUSTRIAL MEDICAL GASES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDUSTRIAL MEDICAL GASES 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 INDUSTRIAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDUSTRIAL MEDICAL GASES has no effect on the direction of AIRTEL AFRICA i.e., AIRTEL AFRICA and INDUSTRIAL MEDICAL go up and down completely randomly.

Pair Corralation between AIRTEL AFRICA and INDUSTRIAL MEDICAL

Assuming the 90 days trading horizon AIRTEL AFRICA PLC is expected to under-perform the INDUSTRIAL MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, AIRTEL AFRICA PLC is 4.3 times less risky than INDUSTRIAL MEDICAL. The stock trades about -0.13 of its potential returns per unit of risk. The INDUSTRIAL MEDICAL GASES is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,500  in INDUSTRIAL MEDICAL GASES on September 12, 2024 and sell it today you would earn a total of  295.00  from holding INDUSTRIAL MEDICAL GASES or generate 8.43% return on investment over 90 days.

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

AIRTEL AFRICA PLC  vs.  INDUSTRIAL MEDICAL GASES

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 current stock price disturbance, may contribute to short-term losses for the investors.

INDUSTRIAL MEDICAL GASES

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in INDUSTRIAL MEDICAL GASES are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, INDUSTRIAL MEDICAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AIRTEL AFRICA and INDUSTRIAL MEDICAL

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

The idea behind AIRTEL AFRICA PLC and INDUSTRIAL MEDICAL GASES 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.