Correlation Between MSCI and FATFISH GROUP

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

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

Diversification Opportunities for MSCI and FATFISH GROUP

0.67

Correlation Coefficient

MSCI  FATFISH GROUP

Poor diversification

The 3 months correlation between MSCI and FATFISH is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding MSCI Inc and FATFISH GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FATFISH GROUP LTD and MSCI 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 MSCI Inc are associated (or correlated) with FATFISH GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FATFISH GROUP LTD has no effect on the direction of MSCI i.e., MSCI and FATFISH GROUP go up and down completely randomly.

Pair Corralation between MSCI and FATFISH GROUP

Assuming the 90 days horizon MSCI is expected to generate 1.87 times less return on investment than FATFISH GROUP. But when comparing it to its historical volatility, MSCI Inc is 9.52 times less risky than FATFISH GROUP. It trades about 0.32 of its potential returns per unit of risk. FATFISH GROUP LTD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  0.50  in FATFISH GROUP LTD on September 1, 2024 and sell it today you would earn a total of  0.00  from holding FATFISH GROUP LTD or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

MSCI Inc  vs.  FATFISH GROUP LTD

MSCI Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MSCI Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MSCI may actually be approaching a critical reversion point that can send shares even higher in December 2024.

FATFISH GROUP LTD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FATFISH GROUP LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FATFISH GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MSCI and FATFISH GROUP

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

The idea behind MSCI Inc and FATFISH GROUP LTD 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.