Correlation Between MCB GROUP and FINCORP INVESTMENT

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

By analyzing existing cross correlation between MCB GROUP LIMITED and FINCORP INVESTMENT LTD, you can compare the effects of market volatilities on MCB GROUP and FINCORP INVESTMENT 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 FINCORP INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB GROUP and FINCORP INVESTMENT.

Diversification Opportunities for MCB GROUP and FINCORP INVESTMENT

0.3

Correlation Coefficient

MCB GROUP  FINCORP INVESTMENT

Weak diversification

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

Pair Corralation between MCB GROUP and FINCORP INVESTMENT

Assuming the 90 days trading horizon MCB GROUP is expected to generate 2.05 times less return on investment than FINCORP INVESTMENT. But when comparing it to its historical volatility, MCB GROUP LIMITED is 3.67 times less risky than FINCORP INVESTMENT. It trades about 0.21 of its potential returns per unit of risk. FINCORP INVESTMENT LTD is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,755  in FINCORP INVESTMENT LTD on December 30, 2024 and sell it today you would earn a total of  220.00  from holding FINCORP INVESTMENT LTD or generate 12.54% return on investment over 90 days.

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

MCB GROUP LIMITED  vs.  FINCORP INVESTMENT LTD

MCB GROUP LIMITED

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MCB GROUP LIMITED are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, MCB GROUP may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FINCORP INVESTMENT LTD

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FINCORP INVESTMENT LTD are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, FINCORP INVESTMENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MCB GROUP and FINCORP INVESTMENT

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

The idea behind MCB GROUP LIMITED and FINCORP INVESTMENT 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.