Correlation Between MA Financial and EMvision Medical

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

By analyzing existing cross correlation between MA Financial Group and EMvision Medical Devices, you can compare the effects of market volatilities on MA Financial and EMvision Medical 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 MA Financial with a short position of EMvision Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MA Financial and EMvision Medical.

Diversification Opportunities for MA Financial and EMvision Medical

-0.53

Correlation Coefficient

MA Financial  EMvision Medical

Excellent diversification

The 3 months correlation between MAF and EMvision is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding MA Financial Group and EMvision Medical Devices in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMvision Medical Devices and MA Financial 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 MA Financial Group are associated (or correlated) with EMvision Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMvision Medical Devices has no effect on the direction of MA Financial i.e., MA Financial and EMvision Medical go up and down completely randomly.

Pair Corralation between MA Financial and EMvision Medical

Assuming the 90 days trading horizon MA Financial Group is expected to under-perform the EMvision Medical. But the stock apears to be less risky and, when comparing its historical volatility, MA Financial Group is 1.41 times less risky than EMvision Medical. The stock trades about -0.39 of its potential returns per unit of risk. The EMvision Medical Devices is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  189.00  in EMvision Medical Devices on September 23, 2024 and sell it today you would lose (4.00) from holding EMvision Medical Devices or give up 2.12% of portfolio value over 90 days.

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

MA Financial Group  vs.  EMvision Medical Devices

MA Financial Group

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MA Financial Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MA Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

EMvision Medical Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EMvision Medical Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain 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 MA Financial and EMvision Medical

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

The idea behind MA Financial Group and EMvision Medical Devices 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.

Check out your portfolio center.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.