Correlation Between MCB Investment and Security Investment

Can any of the company-specific risk be diversified away by investing in both MCB Investment and Security 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 Investment and Security Investment 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 Security Investment Bank, you can compare the effects of market volatilities on MCB Investment and Security 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 Investment with a short position of Security Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB Investment and Security Investment.

Diversification Opportunities for MCB Investment and Security Investment

-0.02

Correlation Coefficient

MCB Investment  Security Investment

Good diversification

The 3 months correlation between MCB and Security is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and Security Investment Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Security Investment Bank 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 Security Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Security Investment Bank has no effect on the direction of MCB Investment i.e., MCB Investment and Security Investment go up and down completely randomly.

Pair Corralation between MCB Investment and Security Investment

Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 0.89 times more return on investment than Security Investment. However, MCB Investment Manag is 1.12 times less risky than Security Investment. It trades about 0.28 of its potential returns per unit of risk. Security Investment Bank is currently generating about 0.0 per unit of risk. If you would invest  3,699  in MCB Investment Manag on September 14, 2024 and sell it today you would earn a total of  2,801  from holding MCB Investment Manag or generate 75.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

MCB Investment Manag  vs.  Security Investment Bank

MCB Investment Manag

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MCB Investment Manag are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, MCB Investment disclosed solid returns over the last few months and may actually be approaching a breakup point.

Security Investment Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Security Investment Bank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Security Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MCB Investment and Security Investment

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

The idea behind MCB Investment Manag and Security Investment Bank 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 CEOs Directory module to screen CEOs from public companies around the world.