Correlation Between Solid State and MJ International

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

By analyzing existing cross correlation between Solid State System and MJ International Co, you can compare the effects of market volatilities on Solid State and MJ International 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 Solid State with a short position of MJ International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solid State and MJ International.

Diversification Opportunities for Solid State and MJ International

-0.05

Correlation Coefficient

Solid State  MJ International

Good diversification

The 3 months correlation between Solid and 8466 is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Solid State System and MJ International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MJ International and Solid State 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 Solid State System are associated (or correlated) with MJ International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MJ International has no effect on the direction of Solid State i.e., Solid State and MJ International go up and down completely randomly.

Pair Corralation between Solid State and MJ International

Assuming the 90 days trading horizon Solid State System is expected to generate 1.23 times more return on investment than MJ International. However, Solid State is 1.23 times more volatile than MJ International Co. It trades about 0.0 of its potential returns per unit of risk. MJ International Co is currently generating about -0.03 per unit of risk. If you would invest  2,250  in Solid State System on December 22, 2024 and sell it today you would lose (30.00) from holding Solid State System or give up 1.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Solid State System  vs.  MJ International Co

Solid State System

Risk-Adjusted Performance

Very Weak

Over the last 90 days Solid State System has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Solid State is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

MJ International

Risk-Adjusted Performance

Very Weak

Over the last 90 days MJ International Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, MJ International is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Solid State and MJ International

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

The idea behind Solid State System and MJ International 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.