Correlation Between FORMPIPE SOFTWARE and MBANK (BRUSG)

Can any of the company-specific risk be diversified away by investing in both FORMPIPE SOFTWARE and MBANK (BRUSG) 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 FORMPIPE SOFTWARE and MBANK (BRUSG) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FORMPIPE SOFTWARE AB and MBANK, you can compare the effects of market volatilities on FORMPIPE SOFTWARE and MBANK (BRUSG) 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 FORMPIPE SOFTWARE with a short position of MBANK (BRUSG). Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and MBANK (BRUSG).

Diversification Opportunities for FORMPIPE SOFTWARE and MBANK (BRUSG)

-0.44

Correlation Coefficient

FORMPIPE SOFTWARE  MBANK (BRUSG)

Very good diversification

The 3 months correlation between FORMPIPE and MBANK is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK (BRUSG) and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB are associated (or correlated) with MBANK (BRUSG). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK (BRUSG) has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and MBANK (BRUSG) go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and MBANK (BRUSG)

Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to generate 1.5 times more return on investment than MBANK (BRUSG). However, FORMPIPE SOFTWARE is 1.5 times more volatile than MBANK. It trades about 0.08 of its potential returns per unit of risk. MBANK is currently generating about -0.05 per unit of risk. If you would invest  197.00  in FORMPIPE SOFTWARE AB on October 15, 2024 and sell it today you would earn a total of  26.00  from holding FORMPIPE SOFTWARE AB or generate 13.2% return on investment over 90 days.

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

FORMPIPE SOFTWARE AB  vs.  MBANK

FORMPIPE SOFTWARE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, FORMPIPE SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

MBANK (BRUSG)

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with FORMPIPE SOFTWARE and MBANK (BRUSG)

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

The idea behind FORMPIPE SOFTWARE AB and MBANK 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.