Correlation Between MALAWI PROPERTY and FDH BANK

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

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

Diversification Opportunities for MALAWI PROPERTY and FDH BANK

0.87

Correlation Coefficient

MALAWI PROPERTY  FDH BANK

Very poor diversification

The 3 months correlation between MALAWI and FDH is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MALAWI PROPERTY INVESTMENT and FDH BANK PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FDH BANK PLC and MALAWI PROPERTY 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 MALAWI PROPERTY INVESTMENT are associated (or correlated) with FDH BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FDH BANK PLC has no effect on the direction of MALAWI PROPERTY i.e., MALAWI PROPERTY and FDH BANK go up and down completely randomly.

Pair Corralation between MALAWI PROPERTY and FDH BANK

Assuming the 90 days trading horizon MALAWI PROPERTY is expected to generate 31.44 times less return on investment than FDH BANK. But when comparing it to its historical volatility, MALAWI PROPERTY INVESTMENT is 11.6 times less risky than FDH BANK. It trades about 0.13 of its potential returns per unit of risk. FDH BANK PLC is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest  14,823  in FDH BANK PLC on December 30, 2024 and sell it today you would earn a total of  16,696  from holding FDH BANK PLC or generate 112.64% return on investment over 90 days.

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

MALAWI PROPERTY INVESTMENT  vs.  FDH BANK PLC

MALAWI PROPERTY INVE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MALAWI PROPERTY INVESTMENT are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, MALAWI PROPERTY is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

FDH BANK PLC

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in FDH BANK PLC are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, FDH BANK unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MALAWI PROPERTY and FDH BANK

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

The idea behind MALAWI PROPERTY INVESTMENT and FDH 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.