Correlation Between MITECH CoLtd and Moonbae Steel

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

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

Diversification Opportunities for MITECH CoLtd and Moonbae Steel

-0.21

Correlation Coefficient

MITECH CoLtd  Moonbae Steel

Very good diversification

The 3 months correlation between MITECH and Moonbae is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding MITECH CoLtd and Moonbae Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Moonbae Steel and MITECH CoLtd 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 MITECH CoLtd are associated (or correlated) with Moonbae Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Moonbae Steel has no effect on the direction of MITECH CoLtd i.e., MITECH CoLtd and Moonbae Steel go up and down completely randomly.

Pair Corralation between MITECH CoLtd and Moonbae Steel

Assuming the 90 days trading horizon MITECH CoLtd is expected to generate 0.69 times more return on investment than Moonbae Steel. However, MITECH CoLtd is 1.44 times less risky than Moonbae Steel. It trades about 0.17 of its potential returns per unit of risk. Moonbae Steel is currently generating about -0.08 per unit of risk. If you would invest  751,000  in MITECH CoLtd on September 22, 2024 and sell it today you would earn a total of  64,000  from holding MITECH CoLtd or generate 8.52% return on investment over 90 days.

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

MITECH CoLtd  vs.  Moonbae Steel

MITECH CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MITECH CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MITECH CoLtd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Moonbae Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Moonbae Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MITECH CoLtd and Moonbae Steel

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

The idea behind MITECH CoLtd and Moonbae Steel 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.