Correlation Between AFREXIMBANK and EXCELSIOR UNITED

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

By analyzing existing cross correlation between AFREXIMBANK and EXCELSIOR UNITED DEVELOPMENT, you can compare the effects of market volatilities on AFREXIMBANK and EXCELSIOR UNITED 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 AFREXIMBANK with a short position of EXCELSIOR UNITED. Check out your portfolio center. Please also check ongoing floating volatility patterns of AFREXIMBANK and EXCELSIOR UNITED.

Diversification Opportunities for AFREXIMBANK and EXCELSIOR UNITED

-0.04

Correlation Coefficient

AFREXIMBANK  EXCELSIOR UNITED

Good diversification

The 3 months correlation between AFREXIMBANK and EXCELSIOR is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding AFREXIMBANK and EXCELSIOR UNITED DEVELOPMENT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXCELSIOR UNITED DEV and AFREXIMBANK 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 AFREXIMBANK are associated (or correlated) with EXCELSIOR UNITED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXCELSIOR UNITED DEV has no effect on the direction of AFREXIMBANK i.e., AFREXIMBANK and EXCELSIOR UNITED go up and down completely randomly.

Pair Corralation between AFREXIMBANK and EXCELSIOR UNITED

Assuming the 90 days trading horizon AFREXIMBANK is expected to generate 0.23 times more return on investment than EXCELSIOR UNITED. However, AFREXIMBANK is 4.41 times less risky than EXCELSIOR UNITED. It trades about -0.07 of its potential returns per unit of risk. EXCELSIOR UNITED DEVELOPMENT is currently generating about -0.07 per unit of risk. If you would invest  271.00  in AFREXIMBANK on September 12, 2024 and sell it today you would lose (1.00) from holding AFREXIMBANK or give up 0.37% of portfolio value over 90 days.

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

AFREXIMBANK  vs.  EXCELSIOR UNITED DEVELOPMENT

AFREXIMBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AFREXIMBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, AFREXIMBANK is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

EXCELSIOR UNITED DEV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EXCELSIOR UNITED DEVELOPMENT has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, EXCELSIOR UNITED is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AFREXIMBANK and EXCELSIOR UNITED

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

The idea behind AFREXIMBANK and EXCELSIOR UNITED DEVELOPMENT 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 Transaction History module to view history of all your transactions and understand their impact on performance.