Correlation Between FIDSON HEALTHCARE and FIDELITY BANK

Can any of the company-specific risk be diversified away by investing in both FIDSON HEALTHCARE and FIDELITY BANK 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 FIDELITY BANK 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 FIDELITY BANK PLC, you can compare the effects of market volatilities on FIDSON HEALTHCARE and FIDELITY BANK 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 FIDELITY BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIDSON HEALTHCARE and FIDELITY BANK.

Diversification Opportunities for FIDSON HEALTHCARE and FIDELITY BANK

0.54

Correlation Coefficient

FIDSON HEALTHCARE  FIDELITY BANK

Very weak diversification

The 3 months correlation between FIDSON and FIDELITY is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FIDSON HEALTHCARE PLC and FIDELITY BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIDELITY BANK PLC 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 FIDELITY BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIDELITY BANK PLC has no effect on the direction of FIDSON HEALTHCARE i.e., FIDSON HEALTHCARE and FIDELITY BANK go up and down completely randomly.

Pair Corralation between FIDSON HEALTHCARE and FIDELITY BANK

Assuming the 90 days trading horizon FIDSON HEALTHCARE is expected to generate 4.69 times less return on investment than FIDELITY BANK. In addition to that, FIDSON HEALTHCARE is 1.08 times more volatile than FIDELITY BANK PLC. It trades about 0.04 of its total potential returns per unit of risk. FIDELITY BANK PLC is currently generating about 0.22 per unit of volatility. If you would invest  1,440  in FIDELITY BANK PLC on October 26, 2024 and sell it today you would earn a total of  380.00  from holding FIDELITY BANK PLC or generate 26.39% 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.  FIDELITY BANK PLC

FIDSON HEALTHCARE PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FIDSON HEALTHCARE PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, FIDSON HEALTHCARE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

FIDELITY BANK PLC

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FIDELITY BANK PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental drivers, FIDELITY BANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FIDSON HEALTHCARE and FIDELITY BANK

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

The idea behind FIDSON HEALTHCARE PLC and FIDELITY BANK 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.