Correlation Between MClean Technologies and MI Technovation

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

Diversification Opportunities for MClean Technologies and MI Technovation

0.46

Correlation Coefficient

MClean Technologies  MI Technovation

Very weak diversification

The 3 months correlation between MClean and 5286 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and MI Technovation Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MI Technovation 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 MI Technovation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MI Technovation Bhd has no effect on the direction of MClean Technologies i.e., MClean Technologies and MI Technovation go up and down completely randomly.

Pair Corralation between MClean Technologies and MI Technovation

Assuming the 90 days trading horizon MClean Technologies is expected to generate 1.38 times less return on investment than MI Technovation. In addition to that, MClean Technologies is 1.96 times more volatile than MI Technovation Bhd. It trades about 0.08 of its total potential returns per unit of risk. MI Technovation Bhd is currently generating about 0.2 per unit of volatility. If you would invest  181.00  in MI Technovation Bhd on September 27, 2024 and sell it today you would earn a total of  42.00  from holding MI Technovation Bhd or generate 23.2% return on investment over 90 days.

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

MClean Technologies Bhd  vs.  MI Technovation Bhd

MClean Technologies Bhd

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MClean Technologies Bhd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MClean Technologies may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MI Technovation Bhd

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MI Technovation Bhd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MI Technovation disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MClean Technologies and MI Technovation

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

The idea behind MClean Technologies Bhd and MI Technovation 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.