Correlation Between Discount Investment and Mobile Max

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

By analyzing existing cross correlation between Discount Investment Corp and Mobile Max M, you can compare the effects of market volatilities on Discount Investment and Mobile Max 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 Discount Investment with a short position of Mobile Max. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discount Investment and Mobile Max.

Diversification Opportunities for Discount Investment and Mobile Max

-0.67

Correlation Coefficient

Discount Investment  Mobile Max

Excellent diversification

The 3 months correlation between Discount and Mobile is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Discount Investment Corp and Mobile Max M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobile Max M and Discount Investment 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 Discount Investment Corp are associated (or correlated) with Mobile Max. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobile Max M has no effect on the direction of Discount Investment i.e., Discount Investment and Mobile Max go up and down completely randomly.

Pair Corralation between Discount Investment and Mobile Max

Assuming the 90 days trading horizon Discount Investment Corp is expected to under-perform the Mobile Max. But the stock apears to be less risky and, when comparing its historical volatility, Discount Investment Corp is 4.47 times less risky than Mobile Max. The stock trades about -0.4 of its potential returns per unit of risk. The Mobile Max M is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,460  in Mobile Max M on October 7, 2024 and sell it today you would earn a total of  280.00  from holding Mobile Max M or generate 8.09% return on investment over 90 days.

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

Discount Investment Corp  vs.  Mobile Max M

Discount Investment Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Discount Investment Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Discount Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Mobile Max M

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mobile Max M are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mobile Max is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Discount Investment and Mobile Max

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

The idea behind Discount Investment Corp and Mobile Max M 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.