Correlation Between HM Inwest and MCI Management

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

By analyzing existing cross correlation between HM Inwest SA and MCI Management SA, you can compare the effects of market volatilities on HM Inwest and MCI Management 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 HM Inwest with a short position of MCI Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of HM Inwest and MCI Management.

Diversification Opportunities for HM Inwest and MCI Management

0.08

Correlation Coefficient

HM Inwest  MCI Management

Significant diversification

The 3 months correlation between HMI and MCI is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding HM Inwest SA and MCI Management SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCI Management SA and HM Inwest 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 HM Inwest SA are associated (or correlated) with MCI Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCI Management SA has no effect on the direction of HM Inwest i.e., HM Inwest and MCI Management go up and down completely randomly.

Pair Corralation between HM Inwest and MCI Management

Assuming the 90 days trading horizon HM Inwest SA is expected to generate 1.54 times more return on investment than MCI Management. However, HM Inwest is 1.54 times more volatile than MCI Management SA. It trades about 0.05 of its potential returns per unit of risk. MCI Management SA is currently generating about 0.06 per unit of risk. If you would invest  3,300  in HM Inwest SA on September 14, 2024 and sell it today you would earn a total of  1,200  from holding HM Inwest SA or generate 36.36% return on investment over 90 days.

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

HM Inwest SA  vs.  MCI Management SA

HM Inwest SA

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HM Inwest SA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, HM Inwest reported solid returns over the last few months and may actually be approaching a breakup point.

MCI Management SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MCI Management SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MCI Management is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with HM Inwest and MCI Management

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

The idea behind HM Inwest SA and MCI Management SA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.