Correlation Between Loads and MCB Investment

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

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

Diversification Opportunities for Loads and MCB Investment

0.87

Correlation Coefficient

Loads  MCB Investment

Very poor diversification

The 3 months correlation between Loads and MCB is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Loads and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag and Loads 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 Loads are associated (or correlated) with MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of Loads i.e., Loads and MCB Investment go up and down completely randomly.

Pair Corralation between Loads and MCB Investment

Assuming the 90 days trading horizon Loads is expected to generate 1.61 times less return on investment than MCB Investment. But when comparing it to its historical volatility, Loads is 1.03 times less risky than MCB Investment. It trades about 0.2 of its potential returns per unit of risk. MCB Investment Manag is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  3,503  in MCB Investment Manag on October 3, 2024 and sell it today you would earn a total of  3,187  from holding MCB Investment Manag or generate 90.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Loads  vs.  MCB Investment Manag

Loads

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Loads are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Loads disclosed solid returns over the last few months and may actually be approaching a breakup point.

MCB Investment Manag

Risk-Adjusted Performance

24 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MCB Investment Manag are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, MCB Investment disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Loads and MCB Investment

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

The idea behind Loads and MCB Investment Manag 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.