Correlation Between Man Infraconstructio and MRF

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

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

Diversification Opportunities for Man Infraconstructio and MRF

0.3

Correlation Coefficient

Man Infraconstructio  MRF

Weak diversification

The 3 months correlation between Man and MRF is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Man Infraconstruction Limited and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited and Man Infraconstructio 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 Man Infraconstruction Limited are associated (or correlated) with MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Man Infraconstructio i.e., Man Infraconstructio and MRF go up and down completely randomly.

Pair Corralation between Man Infraconstructio and MRF

Assuming the 90 days trading horizon Man Infraconstruction Limited is expected to generate 3.01 times more return on investment than MRF. However, Man Infraconstructio is 3.01 times more volatile than MRF Limited. It trades about 0.26 of its potential returns per unit of risk. MRF Limited is currently generating about 0.22 per unit of risk. If you would invest  19,822  in Man Infraconstruction Limited on September 27, 2024 and sell it today you would earn a total of  3,573  from holding Man Infraconstruction Limited or generate 18.03% return on investment over 90 days.

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

Man Infraconstruction Limited  vs.  MRF Limited

Man Infraconstruction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Man Infraconstruction Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady technical and fundamental indicators, Man Infraconstructio reported solid returns over the last few months and may actually be approaching a breakup point.

MRF Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MRF Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Man Infraconstructio and MRF

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

The idea behind Man Infraconstruction Limited and MRF Limited 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..