Correlation Between Irish Continental and Malin Plc

Can any of the company-specific risk be diversified away by investing in both Irish Continental and Malin Plc 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 Irish Continental and Malin Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Irish Continental Group and Malin plc, you can compare the effects of market volatilities on Irish Continental and Malin Plc 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 Irish Continental with a short position of Malin Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Irish Continental and Malin Plc.

Diversification Opportunities for Irish Continental and Malin Plc

-0.46

Correlation Coefficient

Irish Continental  Malin Plc

Very good diversification

The 3 months correlation between Irish and Malin is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Irish Continental Group and Malin plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malin plc and Irish Continental 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 Irish Continental Group are associated (or correlated) with Malin Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malin plc has no effect on the direction of Irish Continental i.e., Irish Continental and Malin Plc go up and down completely randomly.

Pair Corralation between Irish Continental and Malin Plc

Assuming the 90 days trading horizon Irish Continental Group is expected to under-perform the Malin Plc. But the stock apears to be less risky and, when comparing its historical volatility, Irish Continental Group is 2.02 times less risky than Malin Plc. The stock trades about -0.08 of its potential returns per unit of risk. The Malin plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  870.00  in Malin plc on October 12, 2024 and sell it today you would earn a total of  0.00  from holding Malin plc or generate 0.0% return on investment over 90 days.

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

Irish Continental Group  vs.  Malin plc

Irish Continental

Risk-Adjusted Performance

0 of 100

Very Weak

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

Malin plc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malin plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Malin Plc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Irish Continental and Malin Plc

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

The idea behind Irish Continental Group and Malin plc 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.