Correlation Between Eurocharm Holdings and Mosa Industrial

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

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

Diversification Opportunities for Eurocharm Holdings and Mosa Industrial

0.12

Correlation Coefficient

Eurocharm Holdings  Mosa Industrial

Average diversification

The 3 months correlation between Eurocharm and Mosa is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eurocharm Holdings Co and Mosa Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosa Industrial Corp and Eurocharm Holdings 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 Eurocharm Holdings Co are associated (or correlated) with Mosa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosa Industrial Corp has no effect on the direction of Eurocharm Holdings i.e., Eurocharm Holdings and Mosa Industrial go up and down completely randomly.

Pair Corralation between Eurocharm Holdings and Mosa Industrial

Assuming the 90 days trading horizon Eurocharm Holdings Co is expected to under-perform the Mosa Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Eurocharm Holdings Co is 1.46 times less risky than Mosa Industrial. The stock trades about -0.08 of its potential returns per unit of risk. The Mosa Industrial Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,175  in Mosa Industrial Corp on December 22, 2024 and sell it today you would earn a total of  30.00  from holding Mosa Industrial Corp or generate 1.38% return on investment over 90 days.

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

Eurocharm Holdings Co  vs.  Mosa Industrial Corp

Eurocharm Holdings

Risk-Adjusted Performance

Very Weak

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

Mosa Industrial Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mosa Industrial Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mosa Industrial 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 Eurocharm Holdings and Mosa Industrial

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

The idea behind Eurocharm Holdings Co and Mosa Industrial Corp 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.