Correlation Between KENYA RE and SASINI

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

By analyzing existing cross correlation between KENYA RE INSURANCE PORATION and SASINI LTD, you can compare the effects of market volatilities on KENYA RE and SASINI 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 KENYA RE with a short position of SASINI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KENYA RE and SASINI.

Diversification Opportunities for KENYA RE and SASINI

0.4

Correlation Coefficient

KENYA RE  SASINI

Very weak diversification

The 3 months correlation between KENYA and SASINI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KENYA RE INSURANCE PORATION and SASINI LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SASINI LTD and KENYA RE 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 KENYA RE INSURANCE PORATION are associated (or correlated) with SASINI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SASINI LTD has no effect on the direction of KENYA RE i.e., KENYA RE and SASINI go up and down completely randomly.

Pair Corralation between KENYA RE and SASINI

Assuming the 90 days trading horizon KENYA RE INSURANCE PORATION is expected to generate 1.11 times more return on investment than SASINI. However, KENYA RE is 1.11 times more volatile than SASINI LTD. It trades about -0.01 of its potential returns per unit of risk. SASINI LTD is currently generating about -0.01 per unit of risk. If you would invest  184.00  in KENYA RE INSURANCE PORATION on September 12, 2024 and sell it today you would lose (73.00) from holding KENYA RE INSURANCE PORATION or give up 39.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

KENYA RE INSURANCE PORATION  vs.  SASINI LTD

KENYA RE INSURANCE

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in KENYA RE INSURANCE PORATION are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, KENYA RE is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SASINI LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SASINI LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with KENYA RE and SASINI

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

The idea behind KENYA RE INSURANCE PORATION and SASINI LTD 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.