Correlation Between MClean Technologies and Cengild Medical

Can any of the company-specific risk be diversified away by investing in both MClean Technologies and Cengild Medical 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 Cengild Medical 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 Cengild Medical Berhad, you can compare the effects of market volatilities on MClean Technologies and Cengild Medical 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 Cengild Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MClean Technologies and Cengild Medical.

Diversification Opportunities for MClean Technologies and Cengild Medical

0.17

Correlation Coefficient

MClean Technologies  Cengild Medical

Average diversification

The 3 months correlation between MClean and Cengild is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and Cengild Medical Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cengild Medical Berhad 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 Cengild Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cengild Medical Berhad has no effect on the direction of MClean Technologies i.e., MClean Technologies and Cengild Medical go up and down completely randomly.

Pair Corralation between MClean Technologies and Cengild Medical

Assuming the 90 days trading horizon MClean Technologies is expected to generate 1.14 times less return on investment than Cengild Medical. In addition to that, MClean Technologies is 1.91 times more volatile than Cengild Medical Berhad. It trades about 0.02 of its total potential returns per unit of risk. Cengild Medical Berhad is currently generating about 0.04 per unit of volatility. If you would invest  27.00  in Cengild Medical Berhad on September 5, 2024 and sell it today you would earn a total of  1.00  from holding Cengild Medical Berhad or generate 3.7% return on investment over 90 days.

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

MClean Technologies Bhd  vs.  Cengild Medical Berhad

MClean Technologies Bhd

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MClean Technologies Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Cengild Medical Berhad

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cengild Medical Berhad are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Cengild Medical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MClean Technologies and Cengild Medical

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

The idea behind MClean Technologies Bhd and Cengild Medical Berhad 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.