Correlation Between MCF Energy and Kaltura

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

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

Diversification Opportunities for MCF Energy and Kaltura

0.35

Correlation Coefficient

MCF Energy  Kaltura

Weak diversification

The 3 months correlation between MCF and Kaltura is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding MCF Energy and Kaltura in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kaltura and MCF Energy 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 MCF Energy are associated (or correlated) with Kaltura. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kaltura has no effect on the direction of MCF Energy i.e., MCF Energy and Kaltura go up and down completely randomly.

Pair Corralation between MCF Energy and Kaltura

Assuming the 90 days horizon MCF Energy is expected to generate 1.52 times more return on investment than Kaltura. However, MCF Energy is 1.52 times more volatile than Kaltura. It trades about 0.14 of its potential returns per unit of risk. Kaltura is currently generating about -0.02 per unit of risk. If you would invest  2.90  in MCF Energy on December 28, 2024 and sell it today you would earn a total of  1.70  from holding MCF Energy or generate 58.62% return on investment over 90 days.

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

MCF Energy  vs.  Kaltura

MCF Energy

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCF Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting basic indicators, MCF Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Kaltura

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kaltura has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Kaltura is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with MCF Energy and Kaltura

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

The idea behind MCF Energy and Kaltura 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.

Check out your portfolio center.

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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.