Correlation Between MClean Technologies and Sanichi Technology

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

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

Diversification Opportunities for MClean Technologies and Sanichi Technology

0.16

Correlation Coefficient

MClean Technologies  Sanichi Technology

Average diversification

The 3 months correlation between MClean and Sanichi is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and Sanichi Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanichi Technology Bhd and MClean Technologies 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 MClean Technologies Bhd are associated (or correlated) with Sanichi Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanichi Technology Bhd has no effect on the direction of MClean Technologies i.e., MClean Technologies and Sanichi Technology go up and down completely randomly.

Pair Corralation between MClean Technologies and Sanichi Technology

Assuming the 90 days trading horizon MClean Technologies Bhd is expected to generate 0.78 times more return on investment than Sanichi Technology. However, MClean Technologies Bhd is 1.29 times less risky than Sanichi Technology. It trades about -0.02 of its potential returns per unit of risk. Sanichi Technology Bhd is currently generating about -0.07 per unit of risk. If you would invest  31.00  in MClean Technologies Bhd on December 26, 2024 and sell it today you would lose (2.00) from holding MClean Technologies Bhd or give up 6.45% of portfolio value over 90 days.

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

MClean Technologies Bhd  vs.  Sanichi Technology Bhd

MClean Technologies Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days MClean Technologies Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, MClean Technologies is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Sanichi Technology Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sanichi Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with MClean Technologies and Sanichi Technology

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

The idea behind MClean Technologies Bhd and Sanichi Technology 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.