Correlation Between Coty and MF International

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

By analyzing existing cross correlation between Coty Inc and mF International Limited, you can compare the effects of market volatilities on Coty and MF International 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 Coty with a short position of MF International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coty and MF International.

Diversification Opportunities for Coty and MF International

0.15

Correlation Coefficient

Coty  MF International

Average diversification

The 3 months correlation between Coty and MFI is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Coty Inc and mF International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mF International and Coty 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 Coty Inc are associated (or correlated) with MF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mF International has no effect on the direction of Coty i.e., Coty and MF International go up and down completely randomly.

Pair Corralation between Coty and MF International

Given the investment horizon of 90 days Coty Inc is expected to generate 0.46 times more return on investment than MF International. However, Coty Inc is 2.17 times less risky than MF International. It trades about 0.1 of its potential returns per unit of risk. mF International Limited is currently generating about -0.02 per unit of risk. If you would invest  709.00  in Coty Inc on September 20, 2024 and sell it today you would earn a total of  23.00  from holding Coty Inc or generate 3.24% return on investment over 90 days.

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

Coty Inc  vs.  mF International Limited

Coty Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Coty Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

mF International

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in mF International Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical and fundamental indicators, MF International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Coty and MF International

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

The idea behind Coty Inc and mF International Limited 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.