Correlation Between CMDKF and Micro Imaging

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

By analyzing existing cross correlation between CMDKF and Micro Imaging Technology, you can compare the effects of market volatilities on CMDKF and Micro Imaging 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 CMDKF with a short position of Micro Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of CMDKF and Micro Imaging.

Diversification Opportunities for CMDKF and Micro Imaging

1.0

Correlation Coefficient

CMDKF  Micro Imaging

No risk reduction

The 3 months correlation between CMDKF and Micro is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding CMDKF and Micro Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Imaging Technology and CMDKF 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 CMDKF are associated (or correlated) with Micro Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Imaging Technology has no effect on the direction of CMDKF i.e., CMDKF and Micro Imaging go up and down completely randomly.

Pair Corralation between CMDKF and Micro Imaging

If you would invest  0.01  in Micro Imaging Technology on October 25, 2024 and sell it today you would earn a total of  0.00  from holding Micro Imaging Technology or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.24%
Values	Daily Returns

CMDKF  vs.  Micro Imaging Technology

CMDKF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CMDKF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking signals, CMDKF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Micro Imaging Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Micro Imaging Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Micro Imaging is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with CMDKF and Micro Imaging

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

The idea behind CMDKF and Micro Imaging Technology 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.

Check out your portfolio center.

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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.