Correlation Between FDH BANK and TELEKOM NETWORK

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

By analyzing existing cross correlation between FDH BANK PLC and TELEKOM NETWORK MALAWI, you can compare the effects of market volatilities on FDH BANK and TELEKOM NETWORK 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 FDH BANK with a short position of TELEKOM NETWORK. Check out your portfolio center. Please also check ongoing floating volatility patterns of FDH BANK and TELEKOM NETWORK.

Diversification Opportunities for FDH BANK and TELEKOM NETWORK

0.12

Correlation Coefficient

FDH BANK  TELEKOM NETWORK

Average diversification

The 3 months correlation between FDH and TELEKOM is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding FDH BANK PLC and TELEKOM NETWORK MALAWI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELEKOM NETWORK MALAWI and FDH BANK 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 FDH BANK PLC are associated (or correlated) with TELEKOM NETWORK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELEKOM NETWORK MALAWI has no effect on the direction of FDH BANK i.e., FDH BANK and TELEKOM NETWORK go up and down completely randomly.

Pair Corralation between FDH BANK and TELEKOM NETWORK

Assuming the 90 days trading horizon FDH BANK PLC is expected to generate 0.78 times more return on investment than TELEKOM NETWORK. However, FDH BANK PLC is 1.29 times less risky than TELEKOM NETWORK. It trades about 0.35 of its potential returns per unit of risk. TELEKOM NETWORK MALAWI is currently generating about 0.03 per unit of risk. If you would invest  14,823  in FDH BANK PLC on December 21, 2024 and sell it today you would earn a total of  16,697  from holding FDH BANK PLC or generate 112.64% return on investment over 90 days.

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

FDH BANK PLC  vs.  TELEKOM NETWORK MALAWI

FDH BANK PLC

Risk-Adjusted Performance

Strong

Over the last 90 days FDH BANK PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively weak basic indicators, FDH BANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

TELEKOM NETWORK MALAWI

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TELEKOM NETWORK MALAWI are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, TELEKOM NETWORK may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FDH BANK and TELEKOM NETWORK

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

The idea behind FDH BANK PLC and TELEKOM NETWORK MALAWI 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.