Correlation Between MFC Industrial and Symphony Communication

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

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

Diversification Opportunities for MFC Industrial and Symphony Communication

-0.07

Correlation Coefficient

MFC Industrial  Symphony Communication

Good diversification

The 3 months correlation between MFC and Symphony is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Investment and Symphony Communication Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Symphony Communication and MFC Industrial 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 MFC Industrial Investment are associated (or correlated) with Symphony Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Symphony Communication has no effect on the direction of MFC Industrial i.e., MFC Industrial and Symphony Communication go up and down completely randomly.

Pair Corralation between MFC Industrial and Symphony Communication

Assuming the 90 days trading horizon MFC Industrial Investment is expected to generate 0.29 times more return on investment than Symphony Communication. However, MFC Industrial Investment is 3.43 times less risky than Symphony Communication. It trades about -0.08 of its potential returns per unit of risk. Symphony Communication Public is currently generating about -0.21 per unit of risk. If you would invest  640.00  in MFC Industrial Investment on October 7, 2024 and sell it today you would lose (5.00) from holding MFC Industrial Investment or give up 0.78% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.74%
Values	Daily Returns

MFC Industrial Investment  vs.  Symphony Communication Public

MFC Industrial Investment

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Industrial Investment are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, MFC Industrial is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Symphony Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Symphony Communication Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Symphony Communication is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MFC Industrial and Symphony Communication

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

The idea behind MFC Industrial Investment and Symphony Communication Public 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.