Correlation Between Mosa Industrial and Khgears International

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

By analyzing existing cross correlation between Mosa Industrial Corp and Khgears International Limited, you can compare the effects of market volatilities on Mosa Industrial and Khgears 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 Mosa Industrial with a short position of Khgears International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mosa Industrial and Khgears International.

Diversification Opportunities for Mosa Industrial and Khgears International

-0.24

Correlation Coefficient

Mosa Industrial  Khgears International

Very good diversification

The 3 months correlation between Mosa and Khgears is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Mosa Industrial Corp and Khgears International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Khgears International and Mosa Industrial 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 Mosa Industrial Corp are associated (or correlated) with Khgears International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Khgears International has no effect on the direction of Mosa Industrial i.e., Mosa Industrial and Khgears International go up and down completely randomly.

Pair Corralation between Mosa Industrial and Khgears International

Assuming the 90 days trading horizon Mosa Industrial Corp is expected to under-perform the Khgears International. But the stock apears to be less risky and, when comparing its historical volatility, Mosa Industrial Corp is 1.39 times less risky than Khgears International. The stock trades about 0.0 of its potential returns per unit of risk. The Khgears International Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  7,040  in Khgears International Limited on September 23, 2024 and sell it today you would earn a total of  18,160  from holding Khgears International Limited or generate 257.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Mosa Industrial Corp  vs.  Khgears International Limited

Mosa Industrial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mosa Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Khgears International

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Khgears International Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Khgears International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mosa Industrial and Khgears International

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

The idea behind Mosa Industrial Corp and Khgears International Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.