Correlation Between Information Services and MBANK (BRUSG)

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

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

Diversification Opportunities for Information Services and MBANK (BRUSG)

-0.09

Correlation Coefficient

Information Services  MBANK (BRUSG)

Good diversification

The 3 months correlation between Information and MBANK is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK (BRUSG) and Information Services 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 Information Services International Dentsu 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 Information Services i.e., Information Services and MBANK (BRUSG) go up and down completely randomly.

Pair Corralation between Information Services and MBANK (BRUSG)

Assuming the 90 days horizon Information Services International Dentsu is expected to under-perform the MBANK (BRUSG). But the stock apears to be less risky and, when comparing its historical volatility, Information Services International Dentsu is 1.03 times less risky than MBANK (BRUSG). The stock trades about -0.04 of its potential returns per unit of risk. The MBANK is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  12,385  in MBANK on October 9, 2024 and sell it today you would lose (95.00) from holding MBANK or give up 0.77% of portfolio value over 90 days.

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

Information Services Internati  vs.  MBANK

Information Services

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services International Dentsu are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Information Services is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

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 Information Services and MBANK (BRUSG)

The main advantage of trading using opposite Information Services and MBANK (BRUSG) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Information Services 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 Information Services International Dentsu 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.