Correlation Between MQ Technology and MClean Technologies

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

By analyzing existing cross correlation between MQ Technology Bhd and MClean Technologies Bhd, you can compare the effects of market volatilities on MQ Technology and MClean Technologies 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 MQ Technology with a short position of MClean Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQ Technology and MClean Technologies.

Diversification Opportunities for MQ Technology and MClean Technologies

-0.63

Correlation Coefficient

MQ Technology  MClean Technologies

Excellent diversification

The 3 months correlation between 0070 and MClean is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding MQ Technology Bhd and MClean Technologies Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MClean Technologies Bhd and MQ Technology 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 MQ Technology Bhd are associated (or correlated) with MClean Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MClean Technologies Bhd has no effect on the direction of MQ Technology i.e., MQ Technology and MClean Technologies go up and down completely randomly.

Pair Corralation between MQ Technology and MClean Technologies

Assuming the 90 days trading horizon MQ Technology Bhd is expected to under-perform the MClean Technologies. In addition to that, MQ Technology is 1.05 times more volatile than MClean Technologies Bhd. It trades about -0.03 of its total potential returns per unit of risk. MClean Technologies Bhd is currently generating about 0.06 per unit of volatility. If you would invest  27.00  in MClean Technologies Bhd on October 23, 2024 and sell it today you would earn a total of  3.00  from holding MClean Technologies Bhd or generate 11.11% return on investment over 90 days.

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

MQ Technology Bhd  vs.  MClean Technologies Bhd

MQ Technology Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MQ Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

MClean Technologies Bhd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MClean Technologies Bhd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MClean Technologies disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MQ Technology and MClean Technologies

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

The idea behind MQ Technology Bhd and MClean Technologies Bhd 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.