Correlation Between CP ALL and MCOT Public

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

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

Diversification Opportunities for CP ALL and MCOT Public

-0.13

Correlation Coefficient

CP ALL  MCOT Public

Good diversification

The 3 months correlation between CPALL and MCOT is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding CP ALL Public and MCOT Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCOT Public and CP ALL 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 CP ALL Public are associated (or correlated) with MCOT Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCOT Public has no effect on the direction of CP ALL i.e., CP ALL and MCOT Public go up and down completely randomly.

Pair Corralation between CP ALL and MCOT Public

Assuming the 90 days trading horizon CP ALL Public is expected to under-perform the MCOT Public. But the stock apears to be less risky and, when comparing its historical volatility, CP ALL Public is 4.95 times less risky than MCOT Public. The stock trades about -0.01 of its potential returns per unit of risk. The MCOT Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  308.00  in MCOT Public on September 24, 2024 and sell it today you would earn a total of  242.00  from holding MCOT Public or generate 78.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.38%
Values	Daily Returns

CP ALL Public  vs.  MCOT Public

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat 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.

MCOT Public

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MCOT Public are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MCOT Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CP ALL and MCOT Public

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

The idea behind CP ALL Public and MCOT Public 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.