Correlation Between Macauto Industrial and BizLink Holding

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

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

Diversification Opportunities for Macauto Industrial and BizLink Holding

-0.7

Correlation Coefficient

Macauto Industrial  BizLink Holding

Excellent diversification

The 3 months correlation between Macauto and BizLink is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Macauto Industrial Co and BizLink Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BizLink Holding and Macauto 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 Macauto Industrial Co are associated (or correlated) with BizLink Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BizLink Holding has no effect on the direction of Macauto Industrial i.e., Macauto Industrial and BizLink Holding go up and down completely randomly.

Pair Corralation between Macauto Industrial and BizLink Holding

Assuming the 90 days trading horizon Macauto Industrial Co is expected to generate 0.56 times more return on investment than BizLink Holding. However, Macauto Industrial Co is 1.8 times less risky than BizLink Holding. It trades about -0.31 of its potential returns per unit of risk. BizLink Holding is currently generating about -0.3 per unit of risk. If you would invest  5,870  in Macauto Industrial Co on October 6, 2024 and sell it today you would lose (550.00) from holding Macauto Industrial Co or give up 9.37% of portfolio value over 90 days.

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

Macauto Industrial Co  vs.  BizLink Holding

Macauto Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Macauto Industrial Co 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 February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

BizLink Holding

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BizLink Holding are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, BizLink Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Macauto Industrial and BizLink Holding

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

The idea behind Macauto Industrial Co and BizLink Holding 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .