Correlation Between PEPTONIC MEDICAL and Morgan Stanley

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

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

Diversification Opportunities for PEPTONIC MEDICAL and Morgan Stanley

0.0

Correlation Coefficient

PEPTONIC MEDICAL  Morgan Stanley

Pay attention - limited upside

The 3 months correlation between PEPTONIC and Morgan is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PEPTONIC MEDICAL and Morgan Stanley in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley and PEPTONIC MEDICAL 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 PEPTONIC MEDICAL are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley has no effect on the direction of PEPTONIC MEDICAL i.e., PEPTONIC MEDICAL and Morgan Stanley go up and down completely randomly.

Pair Corralation between PEPTONIC MEDICAL and Morgan Stanley

Assuming the 90 days horizon PEPTONIC MEDICAL is expected to generate 36.19 times more return on investment than Morgan Stanley. However, PEPTONIC MEDICAL is 36.19 times more volatile than Morgan Stanley. It trades about 0.09 of its potential returns per unit of risk. Morgan Stanley is currently generating about 0.14 per unit of risk. If you would invest  0.20  in PEPTONIC MEDICAL on October 12, 2024 and sell it today you would lose (0.18) from holding PEPTONIC MEDICAL or give up 90.0% of portfolio value over 90 days.

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

PEPTONIC MEDICAL  vs.  Morgan Stanley

PEPTONIC MEDICAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Morgan Stanley

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Morgan Stanley exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PEPTONIC MEDICAL and Morgan Stanley

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

The idea behind PEPTONIC MEDICAL and Morgan Stanley 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.