Correlation Between TOTALENERGIES MARKETING and EAST AFRICAN

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

By analyzing existing cross correlation between TOTALENERGIES MARKETING KENYA and EAST AFRICAN BREWERIES, you can compare the effects of market volatilities on TOTALENERGIES MARKETING and EAST AFRICAN 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 TOTALENERGIES MARKETING with a short position of EAST AFRICAN. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOTALENERGIES MARKETING and EAST AFRICAN.

Diversification Opportunities for TOTALENERGIES MARKETING and EAST AFRICAN

0.17

Correlation Coefficient

TOTALENERGIES MARKETING  EAST AFRICAN

Average diversification

The 3 months correlation between TOTALENERGIES and EAST is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding TOTALENERGIES MARKETING KENYA and EAST AFRICAN BREWERIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST AFRICAN BREWERIES and TOTALENERGIES MARKETING 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 TOTALENERGIES MARKETING KENYA are associated (or correlated) with EAST AFRICAN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST AFRICAN BREWERIES has no effect on the direction of TOTALENERGIES MARKETING i.e., TOTALENERGIES MARKETING and EAST AFRICAN go up and down completely randomly.

Pair Corralation between TOTALENERGIES MARKETING and EAST AFRICAN

Assuming the 90 days trading horizon TOTALENERGIES MARKETING is expected to generate 1.57 times less return on investment than EAST AFRICAN. In addition to that, TOTALENERGIES MARKETING is 1.4 times more volatile than EAST AFRICAN BREWERIES. It trades about 0.01 of its total potential returns per unit of risk. EAST AFRICAN BREWERIES is currently generating about 0.01 per unit of volatility. If you would invest  16,575  in EAST AFRICAN BREWERIES on September 3, 2024 and sell it today you would earn a total of  0.00  from holding EAST AFRICAN BREWERIES or generate 0.0% return on investment over 90 days.

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

TOTALENERGIES MARKETING KENYA  vs.  EAST AFRICAN BREWERIES

TOTALENERGIES MARKETING

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TOTALENERGIES MARKETING KENYA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, TOTALENERGIES MARKETING is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

EAST AFRICAN BREWERIES

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EAST AFRICAN BREWERIES are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, EAST AFRICAN may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with TOTALENERGIES MARKETING and EAST AFRICAN

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

The idea behind TOTALENERGIES MARKETING KENYA and EAST AFRICAN BREWERIES 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.