Correlation Between MCBC Holdings and Life Electric

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

By analyzing existing cross correlation between MCBC Holdings and Life Electric Vehicles, you can compare the effects of market volatilities on MCBC Holdings and Life Electric 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 Life Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCBC Holdings and Life Electric.

Diversification Opportunities for MCBC Holdings and Life Electric

-0.06

Correlation Coefficient

MCBC Holdings  Life Electric

Good diversification

The 3 months correlation between MCBC and Life is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and Life Electric Vehicles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Electric Vehicles 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 Life Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Electric Vehicles has no effect on the direction of MCBC Holdings i.e., MCBC Holdings and Life Electric go up and down completely randomly.

Pair Corralation between MCBC Holdings and Life Electric

Given the investment horizon of 90 days MCBC Holdings is expected to under-perform the Life Electric. But the stock apears to be less risky and, when comparing its historical volatility, MCBC Holdings is 4.02 times less risky than Life Electric. The stock trades about -0.01 of its potential returns per unit of risk. The Life Electric Vehicles is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  55.00  in Life Electric Vehicles on September 17, 2024 and sell it today you would lose (23.00) from holding Life Electric Vehicles or give up 41.82% of portfolio value over 90 days.

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

MCBC Holdings  vs.  Life Electric Vehicles

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 weak technical and fundamental indicators, MCBC Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Life Electric Vehicles

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Life Electric Vehicles are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Life Electric may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MCBC Holdings and Life Electric

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

The idea behind MCBC Holdings and Life Electric Vehicles 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.