Correlation Between MCBC Holdings and Charles Colvard

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

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

Diversification Opportunities for MCBC Holdings and Charles Colvard

-0.16

Correlation Coefficient

MCBC Holdings  Charles Colvard

Good diversification

The 3 months correlation between MCBC and Charles is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and Charles Colvard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles Colvard and MCBC Holdings 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 MCBC Holdings are associated (or correlated) with Charles Colvard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles Colvard has no effect on the direction of MCBC Holdings i.e., MCBC Holdings and Charles Colvard go up and down completely randomly.

Pair Corralation between MCBC Holdings and Charles Colvard

Given the investment horizon of 90 days MCBC Holdings is expected to generate 1.86 times less return on investment than Charles Colvard. But when comparing it to its historical volatility, MCBC Holdings is 2.63 times less risky than Charles Colvard. It trades about 0.13 of its potential returns per unit of risk. Charles Colvard is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  145.00  in Charles Colvard on October 24, 2024 and sell it today you would earn a total of  9.00  from holding Charles Colvard or generate 6.21% return on investment over 90 days.

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

MCBC Holdings  vs.  Charles Colvard

MCBC Holdings

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MCBC Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Charles Colvard

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Charles Colvard are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal technical indicators, Charles Colvard reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MCBC Holdings and Charles Colvard

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

The idea behind MCBC Holdings and Charles Colvard 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.