Correlation Between Mcig and Café Serendipity

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

By analyzing existing cross correlation between Mcig Inc and Caf Serendipity Holdings, you can compare the effects of market volatilities on Mcig and Café Serendipity 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 Mcig with a short position of Café Serendipity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mcig and Café Serendipity.

Diversification Opportunities for Mcig and Café Serendipity

-0.14

Correlation Coefficient

Mcig  Café Serendipity

Good diversification

The 3 months correlation between Mcig and Café is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mcig Inc and Caf Serendipity Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caf Serendipity Holdings and Mcig 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 Mcig Inc are associated (or correlated) with Café Serendipity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caf Serendipity Holdings has no effect on the direction of Mcig i.e., Mcig and Café Serendipity go up and down completely randomly.

Pair Corralation between Mcig and Café Serendipity

If you would invest  0.71  in Mcig Inc on October 25, 2024 and sell it today you would earn a total of  0.09  from holding Mcig Inc or generate 12.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.0%
Values	Daily Returns

Mcig Inc  vs.  Caf Serendipity Holdings

Mcig Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mcig Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Mcig demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Caf Serendipity Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caf Serendipity Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, Café Serendipity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mcig and Café Serendipity

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

The idea behind Mcig Inc and Caf Serendipity Holdings 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.