Correlation Between MidCap Financial and COMBA TELECOM

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

By analyzing existing cross correlation between MidCap Financial Investment and COMBA TELECOM SYST, you can compare the effects of market volatilities on MidCap Financial and COMBA TELECOM 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 MidCap Financial with a short position of COMBA TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of MidCap Financial and COMBA TELECOM.

Diversification Opportunities for MidCap Financial and COMBA TELECOM

-0.08

Correlation Coefficient

MidCap Financial  COMBA TELECOM

Good diversification

The 3 months correlation between MidCap and COMBA is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding MidCap Financial Investment and COMBA TELECOM SYST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COMBA TELECOM SYST and MidCap Financial 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 MidCap Financial Investment are associated (or correlated) with COMBA TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COMBA TELECOM SYST has no effect on the direction of MidCap Financial i.e., MidCap Financial and COMBA TELECOM go up and down completely randomly.

Pair Corralation between MidCap Financial and COMBA TELECOM

Assuming the 90 days trading horizon MidCap Financial is expected to generate 9.51 times less return on investment than COMBA TELECOM. But when comparing it to its historical volatility, MidCap Financial Investment is 3.18 times less risky than COMBA TELECOM. It trades about 0.03 of its potential returns per unit of risk. COMBA TELECOM SYST is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  12.00  in COMBA TELECOM SYST on October 25, 2024 and sell it today you would earn a total of  1.00  from holding COMBA TELECOM SYST or generate 8.33% return on investment over 90 days.

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

MidCap Financial Investment  vs.  COMBA TELECOM SYST

MidCap Financial Inv

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MidCap Financial Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, MidCap Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

COMBA TELECOM SYST

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COMBA TELECOM SYST are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, COMBA TELECOM is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MidCap Financial and COMBA TELECOM

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

The idea behind MidCap Financial Investment and COMBA TELECOM SYST 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.