Correlation Between MCB GROUP and UNITED INVESTMENTS

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Can any of the company-specific risk be diversified away by investing in both MCB GROUP and UNITED INVESTMENTS 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 UNITED INVESTMENTS 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 UNITED INVESTMENTS LTD, you can compare the effects of market volatilities on MCB GROUP and UNITED INVESTMENTS 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 UNITED INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB GROUP and UNITED INVESTMENTS.

Diversification Opportunities for MCB GROUP and UNITED INVESTMENTS

0.51
  Correlation Coefficient

Very weak diversification

The 3 months correlation between MCB and UNITED is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding MCB GROUP LTD and UNITED INVESTMENTS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNITED INVESTMENTS 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 UNITED INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNITED INVESTMENTS LTD has no effect on the direction of MCB GROUP i.e., MCB GROUP and UNITED INVESTMENTS go up and down completely randomly.

Pair Corralation between MCB GROUP and UNITED INVESTMENTS

Assuming the 90 days trading horizon MCB GROUP LTD is expected to generate 0.59 times more return on investment than UNITED INVESTMENTS. However, MCB GROUP LTD is 1.69 times less risky than UNITED INVESTMENTS. It trades about 0.12 of its potential returns per unit of risk. UNITED INVESTMENTS LTD is currently generating about -0.26 per unit of risk. If you would invest  1,050  in MCB GROUP LTD on September 28, 2024 and sell it today you would earn a total of  45.00  from holding MCB GROUP LTD or generate 4.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

MCB GROUP LTD  vs.  UNITED INVESTMENTS LTD

 Performance 
       Timeline  
MCB GROUP LTD 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days MCB GROUP LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, MCB GROUP is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
UNITED INVESTMENTS LTD 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days UNITED INVESTMENTS LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

MCB GROUP and UNITED INVESTMENTS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MCB GROUP and UNITED INVESTMENTS

The main advantage of trading using opposite MCB GROUP and UNITED INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB GROUP position performs unexpectedly, UNITED INVESTMENTS 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 UNITED INVESTMENTS will offset losses from the drop in UNITED INVESTMENTS's long position.
The idea behind MCB GROUP LTD and UNITED INVESTMENTS 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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