Correlation Between CAFCA and Morgan Co

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

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

Diversification Opportunities for CAFCA and Morgan Co

0.7

Correlation Coefficient

CAFCA  Morgan Co

Poor diversification

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

Pair Corralation between CAFCA and Morgan Co

Assuming the 90 days trading horizon CAFCA is expected to generate 1.37 times less return on investment than Morgan Co. But when comparing it to its historical volatility, CAFCA LIMITED is 1.3 times less risky than Morgan Co. It trades about 0.23 of its potential returns per unit of risk. Morgan Co Made is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  300.00  in Morgan Co Made on October 12, 2024 and sell it today you would earn a total of  200.00  from holding Morgan Co Made or generate 66.67% return on investment over 90 days.

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

CAFCA LIMITED  vs.  Morgan Co Made

CAFCA LIMITED

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CAFCA LIMITED are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, CAFCA showed solid returns over the last few months and may actually be approaching a breakup point.

Morgan Co Made

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Co Made are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Morgan Co demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAFCA and Morgan Co

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

The idea behind CAFCA LIMITED and Morgan Co Made 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.