Correlation Between NIGERIAN BREWERIES and STANDARD ALLIANCE

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

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

Diversification Opportunities for NIGERIAN BREWERIES and STANDARD ALLIANCE

0.0

Correlation Coefficient

NIGERIAN BREWERIES  STANDARD ALLIANCE

Pay attention - limited upside

The 3 months correlation between NIGERIAN and STANDARD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NIGERIAN BREWERIES PLC and STANDARD ALLIANCE INSURANCE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STANDARD ALLIANCE and NIGERIAN BREWERIES 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 NIGERIAN BREWERIES PLC are associated (or correlated) with STANDARD ALLIANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STANDARD ALLIANCE has no effect on the direction of NIGERIAN BREWERIES i.e., NIGERIAN BREWERIES and STANDARD ALLIANCE go up and down completely randomly.

Pair Corralation between NIGERIAN BREWERIES and STANDARD ALLIANCE

If you would invest  3,250  in NIGERIAN BREWERIES PLC on December 27, 2024 and sell it today you would earn a total of  105.00  from holding NIGERIAN BREWERIES PLC or generate 3.23% return on investment over 90 days.

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

NIGERIAN BREWERIES PLC  vs.  STANDARD ALLIANCE INSURANCE

NIGERIAN BREWERIES PLC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NIGERIAN BREWERIES PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NIGERIAN BREWERIES is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

STANDARD ALLIANCE

Risk-Adjusted Performance

Very Weak

Over the last 90 days STANDARD ALLIANCE INSURANCE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, STANDARD ALLIANCE is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NIGERIAN BREWERIES and STANDARD ALLIANCE

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

The idea behind NIGERIAN BREWERIES PLC and STANDARD ALLIANCE INSURANCE 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.