Correlation Between MBK Public and Land

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

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

Diversification Opportunities for MBK Public and Land

-0.3

Correlation Coefficient

MBK Public  Land

Very good diversification

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

Pair Corralation between MBK Public and Land

Assuming the 90 days trading horizon MBK Public is expected to generate 1.25 times more return on investment than Land. However, MBK Public is 1.25 times more volatile than Land and Houses. It trades about 0.11 of its potential returns per unit of risk. Land and Houses is currently generating about -0.01 per unit of risk. If you would invest  1,698  in MBK Public on September 4, 2024 and sell it today you would earn a total of  252.00  from holding MBK Public or generate 14.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

MBK Public  vs.  Land and Houses

MBK Public

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MBK Public are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MBK Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Land and Houses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Land is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MBK Public and Land

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

The idea behind MBK Public and Land and Houses 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.