Correlation Between Sphere 3D and MKDWELL Tech

Can any of the company-specific risk be diversified away by investing in both Sphere 3D and MKDWELL Tech 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 Sphere 3D and MKDWELL Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sphere 3D Corp and MKDWELL Tech Ordinary, you can compare the effects of market volatilities on Sphere 3D and MKDWELL Tech 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 Sphere 3D with a short position of MKDWELL Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sphere 3D and MKDWELL Tech.

Diversification Opportunities for Sphere 3D and MKDWELL Tech

-0.64

Correlation Coefficient

Sphere 3D  MKDWELL Tech

Excellent diversification

The 3 months correlation between Sphere and MKDWELL is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sphere 3D Corp and MKDWELL Tech Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKDWELL Tech Ordinary and Sphere 3D 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 Sphere 3D Corp are associated (or correlated) with MKDWELL Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKDWELL Tech Ordinary has no effect on the direction of Sphere 3D i.e., Sphere 3D and MKDWELL Tech go up and down completely randomly.

Pair Corralation between Sphere 3D and MKDWELL Tech

Considering the 90-day investment horizon Sphere 3D Corp is expected to generate 0.71 times more return on investment than MKDWELL Tech. However, Sphere 3D Corp is 1.41 times less risky than MKDWELL Tech. It trades about 0.03 of its potential returns per unit of risk. MKDWELL Tech Ordinary is currently generating about -0.07 per unit of risk. If you would invest  132.00  in Sphere 3D Corp on September 26, 2024 and sell it today you would lose (36.00) from holding Sphere 3D Corp or give up 27.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	34.08%
Values	Daily Returns

Sphere 3D Corp  vs.  MKDWELL Tech Ordinary

Sphere 3D Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sphere 3D Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Sphere 3D may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MKDWELL Tech Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKDWELL Tech Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental 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.

Pair Trading with Sphere 3D and MKDWELL Tech

The main advantage of trading using opposite Sphere 3D and MKDWELL Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sphere 3D position performs unexpectedly, MKDWELL Tech 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 MKDWELL Tech will offset losses from the drop in MKDWELL Tech's long position.

The idea behind Sphere 3D Corp and MKDWELL Tech Ordinary 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.