Correlation Between GUINEA INSURANCE and WEMA BANK

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Can any of the company-specific risk be diversified away by investing in both GUINEA INSURANCE and WEMA BANK 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 GUINEA INSURANCE and WEMA BANK into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GUINEA INSURANCE PLC and WEMA BANK PLC, you can compare the effects of market volatilities on GUINEA INSURANCE and WEMA BANK 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 GUINEA INSURANCE with a short position of WEMA BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of GUINEA INSURANCE and WEMA BANK.

Diversification Opportunities for GUINEA INSURANCE and WEMA BANK

0.4
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between GUINEA INSURANCE and WEMA BANK

Assuming the 90 days trading horizon GUINEA INSURANCE PLC is expected to under-perform the WEMA BANK. In addition to that, GUINEA INSURANCE is 1.6 times more volatile than WEMA BANK PLC. It trades about -0.09 of its total potential returns per unit of risk. WEMA BANK PLC is currently generating about -0.07 per unit of volatility. If you would invest  2,195  in WEMA BANK PLC on September 12, 2025 and sell it today you would lose (330.00) from holding WEMA BANK PLC or give up 15.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

GUINEA INSURANCE PLC  vs.  WEMA BANK PLC

 Performance 
       Timeline  
GUINEA INSURANCE PLC 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days GUINEA INSURANCE PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2026. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
WEMA BANK PLC 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days WEMA BANK PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2026. The recent disarray may also be a sign of long period up-swing for the firm investors.

GUINEA INSURANCE and WEMA BANK Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with GUINEA INSURANCE and WEMA BANK

The main advantage of trading using opposite GUINEA INSURANCE and WEMA BANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GUINEA INSURANCE position performs unexpectedly, WEMA BANK 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 WEMA BANK will offset losses from the drop in WEMA BANK's long position.
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The idea behind GUINEA INSURANCE PLC and WEMA BANK PLC 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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