Correlation Between Intouch Holdings and MFEC PCL

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

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

Diversification Opportunities for Intouch Holdings and MFEC PCL

0.72

Correlation Coefficient

Intouch Holdings  MFEC PCL

Poor diversification

The 3 months correlation between Intouch and MFEC is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Intouch Holdings Public and MFEC PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFEC PCL and Intouch Holdings 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 Intouch Holdings Public are associated (or correlated) with MFEC PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFEC PCL has no effect on the direction of Intouch Holdings i.e., Intouch Holdings and MFEC PCL go up and down completely randomly.

Pair Corralation between Intouch Holdings and MFEC PCL

Assuming the 90 days trading horizon Intouch Holdings Public is expected to generate 1.61 times more return on investment than MFEC PCL. However, Intouch Holdings is 1.61 times more volatile than MFEC PCL. It trades about 0.09 of its potential returns per unit of risk. MFEC PCL is currently generating about 0.05 per unit of risk. If you would invest  8,925  in Intouch Holdings Public on September 15, 2024 and sell it today you would earn a total of  1,000.00  from holding Intouch Holdings Public or generate 11.2% return on investment over 90 days.

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

Intouch Holdings Public  vs.  MFEC PCL

Intouch Holdings Public

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intouch Holdings Public are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Intouch Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MFEC PCL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFEC PCL are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, MFEC PCL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Intouch Holdings and MFEC PCL

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

The idea behind Intouch Holdings Public and MFEC PCL 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.