Correlation Between FIDSON HEALTHCARE and ECOBANK TRANSNATIONAL

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

By analyzing existing cross correlation between FIDSON HEALTHCARE PLC and ECOBANK TRANSNATIONAL INCORPORATED, you can compare the effects of market volatilities on FIDSON HEALTHCARE and ECOBANK TRANSNATIONAL 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 FIDSON HEALTHCARE with a short position of ECOBANK TRANSNATIONAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIDSON HEALTHCARE and ECOBANK TRANSNATIONAL.

Diversification Opportunities for FIDSON HEALTHCARE and ECOBANK TRANSNATIONAL

0.58

Correlation Coefficient

FIDSON HEALTHCARE  ECOBANK TRANSNATIONAL

Very weak diversification

The 3 months correlation between FIDSON and ECOBANK is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding FIDSON HEALTHCARE PLC and ECOBANK TRANSNATIONAL INCORPOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ECOBANK TRANSNATIONAL and FIDSON HEALTHCARE 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 FIDSON HEALTHCARE PLC are associated (or correlated) with ECOBANK TRANSNATIONAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ECOBANK TRANSNATIONAL has no effect on the direction of FIDSON HEALTHCARE i.e., FIDSON HEALTHCARE and ECOBANK TRANSNATIONAL go up and down completely randomly.

Pair Corralation between FIDSON HEALTHCARE and ECOBANK TRANSNATIONAL

Assuming the 90 days trading horizon FIDSON HEALTHCARE PLC is expected to generate 1.0 times more return on investment than ECOBANK TRANSNATIONAL. However, FIDSON HEALTHCARE is 1.0 times more volatile than ECOBANK TRANSNATIONAL INCORPORATED. It trades about 0.1 of its potential returns per unit of risk. ECOBANK TRANSNATIONAL INCORPORATED is currently generating about 0.04 per unit of risk. If you would invest  1,550  in FIDSON HEALTHCARE PLC on December 30, 2024 and sell it today you would earn a total of  255.00  from holding FIDSON HEALTHCARE PLC or generate 16.45% return on investment over 90 days.

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

FIDSON HEALTHCARE PLC  vs.  ECOBANK TRANSNATIONAL INCORPOR

FIDSON HEALTHCARE PLC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FIDSON HEALTHCARE PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, FIDSON HEALTHCARE sustained solid returns over the last few months and may actually be approaching a breakup point.

ECOBANK TRANSNATIONAL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ECOBANK TRANSNATIONAL INCORPORATED are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, ECOBANK TRANSNATIONAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FIDSON HEALTHCARE and ECOBANK TRANSNATIONAL

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

The idea behind FIDSON HEALTHCARE PLC and ECOBANK TRANSNATIONAL INCORPORATED 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.