Correlation Between IDP EDUCATION and MBANK

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

By analyzing existing cross correlation between IDP EDUCATION LTD and MBANK, you can compare the effects of market volatilities on IDP EDUCATION and MBANK 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 IDP EDUCATION with a short position of MBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDP EDUCATION and MBANK.

Diversification Opportunities for IDP EDUCATION and MBANK

0.39

Correlation Coefficient

IDP EDUCATION  MBANK

Weak diversification

The 3 months correlation between IDP and MBANK is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding IDP EDUCATION LTD and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK and IDP EDUCATION 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 IDP EDUCATION LTD are associated (or correlated) with MBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK has no effect on the direction of IDP EDUCATION i.e., IDP EDUCATION and MBANK go up and down completely randomly.

Pair Corralation between IDP EDUCATION and MBANK

Assuming the 90 days horizon IDP EDUCATION LTD is expected to under-perform the MBANK. In addition to that, IDP EDUCATION is 1.74 times more volatile than MBANK. It trades about -0.02 of its total potential returns per unit of risk. MBANK is currently generating about 0.03 per unit of volatility. If you would invest  12,690  in MBANK on October 25, 2024 and sell it today you would earn a total of  350.00  from holding MBANK or generate 2.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

IDP EDUCATION LTD  vs.  MBANK

IDP EDUCATION LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDP EDUCATION LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IDP EDUCATION is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MBANK

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MBANK are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, MBANK is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IDP EDUCATION and MBANK

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

The idea behind IDP EDUCATION LTD and MBANK 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.