Correlation Between Laboratory and MPLN Old

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

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

Diversification Opportunities for Laboratory and MPLN Old

0.21

Correlation Coefficient

Laboratory  MPLN Old

Modest diversification

The 3 months correlation between Laboratory and MPLN is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and MPLN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPLN Old and Laboratory 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 Laboratory of are associated (or correlated) with MPLN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPLN Old has no effect on the direction of Laboratory i.e., Laboratory and MPLN Old go up and down completely randomly.

Pair Corralation between Laboratory and MPLN Old

Allowing for the 90-day total investment horizon Laboratory is expected to generate 75.03 times less return on investment than MPLN Old. But when comparing it to its historical volatility, Laboratory of is 8.04 times less risky than MPLN Old. It trades about 0.02 of its potential returns per unit of risk. MPLN Old is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,546  in MPLN Old on December 30, 2024 and sell it today you would earn a total of  769.00  from holding MPLN Old or generate 49.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.13%
Values	Daily Returns

Laboratory of  vs.  MPLN Old

Laboratory

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

MPLN Old

Risk-Adjusted Performance

Good

Over the last 90 days MPLN Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating essential indicators, MPLN Old displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laboratory and MPLN Old

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

The idea behind Laboratory of and MPLN Old 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.