Correlation Between Nigerian Stock and CONSOLIDATED HALLMARK

Can any of the company-specific risk be diversified away by investing in both Nigerian Stock and CONSOLIDATED HALLMARK 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 Stock and CONSOLIDATED HALLMARK into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nigerian Stock Exchange and CONSOLIDATED HALLMARK INSURANCE, you can compare the effects of market volatilities on Nigerian Stock and CONSOLIDATED HALLMARK 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 Stock with a short position of CONSOLIDATED HALLMARK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nigerian Stock and CONSOLIDATED HALLMARK.

Diversification Opportunities for Nigerian Stock and CONSOLIDATED HALLMARK

0.0

Correlation Coefficient

Nigerian Stock  CONSOLIDATED HALLMARK

Pay attention - limited upside

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

Pair Corralation between Nigerian Stock and CONSOLIDATED HALLMARK

Assuming the 90 days trading horizon Nigerian Stock is expected to generate 29.79 times less return on investment than CONSOLIDATED HALLMARK. But when comparing it to its historical volatility, Nigerian Stock Exchange is 13.42 times less risky than CONSOLIDATED HALLMARK. It trades about 0.09 of its potential returns per unit of risk. CONSOLIDATED HALLMARK INSURANCE is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  143.00  in CONSOLIDATED HALLMARK INSURANCE on September 5, 2024 and sell it today you would earn a total of  103.00  from holding CONSOLIDATED HALLMARK INSURANCE or generate 72.03% return on investment over 90 days.

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

Nigerian Stock Exchange  vs.  CONSOLIDATED HALLMARK INSURANC

Pair Trading with Nigerian Stock and CONSOLIDATED HALLMARK

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

The idea behind Nigerian Stock Exchange and CONSOLIDATED HALLMARK 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.