Correlation Between Mobile Tornado and Made Tech

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

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

Diversification Opportunities for Mobile Tornado and Made Tech

0.28

Correlation Coefficient

Mobile Tornado  Made Tech

Modest diversification

The 3 months correlation between Mobile and Made is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Tornado Group and Made Tech Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Made Tech Group and Mobile Tornado 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 Mobile Tornado Group are associated (or correlated) with Made Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Made Tech Group has no effect on the direction of Mobile Tornado i.e., Mobile Tornado and Made Tech go up and down completely randomly.

Pair Corralation between Mobile Tornado and Made Tech

Assuming the 90 days trading horizon Mobile Tornado Group is expected to generate 2.16 times more return on investment than Made Tech. However, Mobile Tornado is 2.16 times more volatile than Made Tech Group. It trades about 0.02 of its potential returns per unit of risk. Made Tech Group is currently generating about 0.02 per unit of risk. If you would invest  185.00  in Mobile Tornado Group on October 11, 2024 and sell it today you would lose (45.00) from holding Mobile Tornado Group or give up 24.32% of portfolio value over 90 days.

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

Mobile Tornado Group  vs.  Made Tech Group

Mobile Tornado Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobile Tornado Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mobile Tornado is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Made Tech Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mobile Tornado and Made Tech

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

The idea behind Mobile Tornado Group and Made Tech Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.