Correlation Between MA Financial and Sims

Can any of the company-specific risk be diversified away by investing in both MA Financial and Sims 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 Sims 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 Sims, you can compare the effects of market volatilities on MA Financial and Sims 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 Sims. Check out your portfolio center. Please also check ongoing floating volatility patterns of MA Financial and Sims.

Diversification Opportunities for MA Financial and Sims

0.46

Correlation Coefficient

MA Financial  Sims

Very weak diversification

The 3 months correlation between MAF and Sims is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MA Financial Group and Sims in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims 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 Sims. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims has no effect on the direction of MA Financial i.e., MA Financial and Sims go up and down completely randomly.

Pair Corralation between MA Financial and Sims

Assuming the 90 days trading horizon MA Financial is expected to generate 2.44 times less return on investment than Sims. In addition to that, MA Financial is 1.22 times more volatile than Sims. It trades about 0.12 of its total potential returns per unit of risk. Sims is currently generating about 0.35 per unit of volatility. If you would invest  1,189  in Sims on October 22, 2024 and sell it today you would earn a total of  148.00  from holding Sims or generate 12.45% return on investment over 90 days.

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

MA Financial Group  vs.  Sims

MA Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MA Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, MA Financial is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Sims

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sims are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Sims is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MA Financial and Sims

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

The idea behind MA Financial Group and Sims 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.