Correlation Between MS Autotech and BH

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

By analyzing existing cross correlation between MS Autotech CoLtd and BH Co, you can compare the effects of market volatilities on MS Autotech and BH 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 MS Autotech with a short position of BH. Check out your portfolio center. Please also check ongoing floating volatility patterns of MS Autotech and BH.

Diversification Opportunities for MS Autotech and BH

-0.22

Correlation Coefficient

MS Autotech  BH

Very good diversification

The 3 months correlation between 123040 and BH is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding MS Autotech CoLtd and BH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Co and MS Autotech 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 MS Autotech CoLtd are associated (or correlated) with BH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Co has no effect on the direction of MS Autotech i.e., MS Autotech and BH go up and down completely randomly.

Pair Corralation between MS Autotech and BH

Assuming the 90 days trading horizon MS Autotech CoLtd is expected to generate 1.88 times more return on investment than BH. However, MS Autotech is 1.88 times more volatile than BH Co. It trades about 0.07 of its potential returns per unit of risk. BH Co is currently generating about -0.16 per unit of risk. If you would invest  239,000  in MS Autotech CoLtd on December 30, 2024 and sell it today you would earn a total of  28,500  from holding MS Autotech CoLtd or generate 11.92% return on investment over 90 days.

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

MS Autotech CoLtd  vs.  BH Co

MS Autotech CoLtd

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MS Autotech CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MS Autotech sustained solid returns over the last few months and may actually be approaching a breakup point.

BH Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days BH Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MS Autotech and BH

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

The idea behind MS Autotech CoLtd and BH Co 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.