Correlation Between NIGERIAN BREWERIES and NEM INSURANCE
Can any of the company-specific risk be diversified away by investing in both NIGERIAN BREWERIES and NEM INSURANCE 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 BREWERIES and NEM INSURANCE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIGERIAN BREWERIES PLC and NEM INSURANCE PLC, you can compare the effects of market volatilities on NIGERIAN BREWERIES and NEM INSURANCE 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 BREWERIES with a short position of NEM INSURANCE. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIGERIAN BREWERIES and NEM INSURANCE.
Diversification Opportunities for NIGERIAN BREWERIES and NEM INSURANCE
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NIGERIAN and NEM is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding NIGERIAN BREWERIES PLC and NEM INSURANCE PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEM INSURANCE PLC and NIGERIAN BREWERIES 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 BREWERIES PLC are associated (or correlated) with NEM INSURANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEM INSURANCE PLC has no effect on the direction of NIGERIAN BREWERIES i.e., NIGERIAN BREWERIES and NEM INSURANCE go up and down completely randomly.
Pair Corralation between NIGERIAN BREWERIES and NEM INSURANCE
Assuming the 90 days trading horizon NIGERIAN BREWERIES is expected to generate 2.12 times less return on investment than NEM INSURANCE. But when comparing it to its historical volatility, NIGERIAN BREWERIES PLC is 1.4 times less risky than NEM INSURANCE. It trades about 0.06 of its potential returns per unit of risk. NEM INSURANCE PLC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 600.00 in NEM INSURANCE PLC on April 24, 2025 and sell it today you would earn a total of 1,400 from holding NEM INSURANCE PLC or generate 233.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIGERIAN BREWERIES PLC vs. NEM INSURANCE PLC
Performance |
| Timeline |
| NIGERIAN BREWERIES PLC |
| NEM INSURANCE PLC |
NIGERIAN BREWERIES and NEM INSURANCE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIGERIAN BREWERIES and NEM INSURANCE
The main advantage of trading using opposite NIGERIAN BREWERIES and NEM INSURANCE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIGERIAN BREWERIES position performs unexpectedly, NEM INSURANCE 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 NEM INSURANCE will offset losses from the drop in NEM INSURANCE's long position.| NIGERIAN BREWERIES vs. GUINEA INSURANCE PLC | NIGERIAN BREWERIES vs. ALUMINIUM EXTRUSION IND | NIGERIAN BREWERIES vs. VITAFOAM NIGERIA PLC | NIGERIAN BREWERIES vs. JAPAUL OIL MARITIME |
| NEM INSURANCE vs. LIVINGTRUST MORTGAGE BANK | NEM INSURANCE vs. UNITED BANK FOR | NEM INSURANCE vs. AFROMEDIA PLC | NEM INSURANCE vs. INTERNATIONAL BREWERIES PLC |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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