Correlation Between MCB Investment and Gatron Industries

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

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

Diversification Opportunities for MCB Investment and Gatron Industries

-0.81

Correlation Coefficient

MCB Investment  Gatron Industries

Pay attention - limited upside

The 3 months correlation between MCB and Gatron is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron Industries and MCB Investment 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 Investment Manag are associated (or correlated) with Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of MCB Investment i.e., MCB Investment and Gatron Industries go up and down completely randomly.

Pair Corralation between MCB Investment and Gatron Industries

Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.57 times more return on investment than Gatron Industries. However, MCB Investment is 1.57 times more volatile than Gatron Industries. It trades about 0.15 of its potential returns per unit of risk. Gatron Industries is currently generating about -0.25 per unit of risk. If you would invest  6,495  in MCB Investment Manag on December 28, 2024 and sell it today you would earn a total of  1,628  from holding MCB Investment Manag or generate 25.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

MCB Investment Manag  vs.  Gatron Industries

MCB Investment Manag

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MCB Investment Manag are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting fundamental drivers, MCB Investment disclosed solid returns over the last few months and may actually be approaching a breakup point.

Gatron Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gatron Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MCB Investment and Gatron Industries

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

The idea behind MCB Investment Manag and Gatron Industries 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.