Correlation Between C I and NIGERIAN BREWERIES

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

By analyzing existing cross correlation between C I LEASING and NIGERIAN BREWERIES PLC, you can compare the effects of market volatilities on C I and NIGERIAN BREWERIES 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 C I with a short position of NIGERIAN BREWERIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of C I and NIGERIAN BREWERIES.

Diversification Opportunities for C I and NIGERIAN BREWERIES

0.06

Correlation Coefficient

C I  NIGERIAN BREWERIES

Significant diversification

The 3 months correlation between CILEASING and NIGERIAN is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding C I LEASING and NIGERIAN BREWERIES PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGERIAN BREWERIES PLC and C I 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 C I LEASING are associated (or correlated) with NIGERIAN BREWERIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGERIAN BREWERIES PLC has no effect on the direction of C I i.e., C I and NIGERIAN BREWERIES go up and down completely randomly.

Pair Corralation between C I and NIGERIAN BREWERIES

Assuming the 90 days trading horizon C I is expected to generate 1.56 times less return on investment than NIGERIAN BREWERIES. In addition to that, C I is 1.28 times more volatile than NIGERIAN BREWERIES PLC. It trades about 0.14 of its total potential returns per unit of risk. NIGERIAN BREWERIES PLC is currently generating about 0.27 per unit of volatility. If you would invest  2,810  in NIGERIAN BREWERIES PLC on October 6, 2024 and sell it today you would earn a total of  405.00  from holding NIGERIAN BREWERIES PLC or generate 14.41% return on investment over 90 days.

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

C I LEASING  vs.  NIGERIAN BREWERIES PLC

C I LEASING

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C I LEASING are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, C I demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NIGERIAN BREWERIES PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NIGERIAN BREWERIES PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, NIGERIAN BREWERIES may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with C I and NIGERIAN BREWERIES

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

The idea behind C I LEASING and NIGERIAN BREWERIES PLC 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.