Correlation Between Coloray International and Mobase Electronics

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

By analyzing existing cross correlation between Coloray International Investment and Mobase Electronics CoLtd, you can compare the effects of market volatilities on Coloray International and Mobase Electronics 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 Coloray International with a short position of Mobase Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coloray International and Mobase Electronics.

Diversification Opportunities for Coloray International and Mobase Electronics

0.61

Correlation Coefficient

Coloray International  Mobase Electronics

Poor diversification

The 3 months correlation between Coloray and Mobase is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Coloray International Investme and Mobase Electronics CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobase Electronics CoLtd and Coloray International 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 Coloray International Investment are associated (or correlated) with Mobase Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobase Electronics CoLtd has no effect on the direction of Coloray International i.e., Coloray International and Mobase Electronics go up and down completely randomly.

Pair Corralation between Coloray International and Mobase Electronics

Assuming the 90 days trading horizon Coloray International Investment is expected to generate 1.84 times more return on investment than Mobase Electronics. However, Coloray International is 1.84 times more volatile than Mobase Electronics CoLtd. It trades about 0.23 of its potential returns per unit of risk. Mobase Electronics CoLtd is currently generating about 0.13 per unit of risk. If you would invest  57,500  in Coloray International Investment on December 25, 2024 and sell it today you would earn a total of  26,600  from holding Coloray International Investment or generate 46.26% return on investment over 90 days.

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

Coloray International Investme  vs.  Mobase Electronics CoLtd

Coloray International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Coloray International Investment are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Coloray International sustained solid returns over the last few months and may actually be approaching a breakup point.

Mobase Electronics CoLtd

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mobase Electronics CoLtd are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mobase Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coloray International and Mobase Electronics

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

The idea behind Coloray International Investment and Mobase Electronics CoLtd 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.