Correlation Between Maj Invest and Maj Invest

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

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

Diversification Opportunities for Maj Invest and Maj Invest

0.8

Correlation Coefficient

Maj Invest  Maj Invest

Very poor diversification

The 3 months correlation between Maj and Maj is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Maj Invest and Maj Invest Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest Value and Maj Invest 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 Maj Invest are associated (or correlated) with Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest Value has no effect on the direction of Maj Invest i.e., Maj Invest and Maj Invest go up and down completely randomly.

Pair Corralation between Maj Invest and Maj Invest

Assuming the 90 days trading horizon Maj Invest is expected to generate 3.44 times less return on investment than Maj Invest. But when comparing it to its historical volatility, Maj Invest is 4.31 times less risky than Maj Invest. It trades about 0.18 of its potential returns per unit of risk. Maj Invest Value is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  18,218  in Maj Invest Value on September 12, 2024 and sell it today you would earn a total of  1,307  from holding Maj Invest Value or generate 7.17% return on investment over 90 days.

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

Maj Invest   vs.  Maj Invest Value

Maj Invest

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat strong forward-looking indicators, Maj Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Maj Invest Value

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest Value are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. Despite somewhat unfluctuating forward-looking indicators, Maj Invest may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Maj Invest and Maj Invest

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

The idea behind Maj Invest and Maj Invest Value 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.