Correlation Between MCB GROUP and PHOENIX BEVERAGES

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

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

Diversification Opportunities for MCB GROUP and PHOENIX BEVERAGES

-0.23

Correlation Coefficient

MCB GROUP  PHOENIX BEVERAGES

Very good diversification

The 3 months correlation between MCB and PHOENIX is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding MCB GROUP LTD and PHOENIX BEVERAGES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHOENIX BEVERAGES LTD and MCB GROUP 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 MCB GROUP LTD are associated (or correlated) with PHOENIX BEVERAGES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHOENIX BEVERAGES LTD has no effect on the direction of MCB GROUP i.e., MCB GROUP and PHOENIX BEVERAGES go up and down completely randomly.

Pair Corralation between MCB GROUP and PHOENIX BEVERAGES

Assuming the 90 days trading horizon MCB GROUP LTD is expected to generate 5.83 times more return on investment than PHOENIX BEVERAGES. However, MCB GROUP is 5.83 times more volatile than PHOENIX BEVERAGES LTD. It trades about 0.06 of its potential returns per unit of risk. PHOENIX BEVERAGES LTD is currently generating about 0.15 per unit of risk. If you would invest  1,030  in MCB GROUP LTD on October 14, 2024 and sell it today you would earn a total of  65.00  from holding MCB GROUP LTD or generate 6.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

MCB GROUP LTD  vs.  PHOENIX BEVERAGES LTD

MCB GROUP LTD

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MCB GROUP LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, MCB GROUP may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PHOENIX BEVERAGES LTD

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PHOENIX BEVERAGES LTD are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, PHOENIX BEVERAGES is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MCB GROUP and PHOENIX BEVERAGES

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

The idea behind MCB GROUP LTD and PHOENIX BEVERAGES LTD 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.