Correlation Between MCI Management and Noble Financials

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

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

Diversification Opportunities for MCI Management and Noble Financials

0.47

Correlation Coefficient

MCI Management  Noble Financials

Very weak diversification

The 3 months correlation between MCI and Noble is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding MCI Management SA and Noble Financials SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Financials and MCI Management 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 MCI Management SA are associated (or correlated) with Noble Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Financials has no effect on the direction of MCI Management i.e., MCI Management and Noble Financials go up and down completely randomly.

Pair Corralation between MCI Management and Noble Financials

Assuming the 90 days trading horizon MCI Management SA is expected to generate 0.46 times more return on investment than Noble Financials. However, MCI Management SA is 2.16 times less risky than Noble Financials. It trades about 0.15 of its potential returns per unit of risk. Noble Financials SA is currently generating about -0.03 per unit of risk. If you would invest  2,530  in MCI Management SA on October 24, 2024 and sell it today you would earn a total of  270.00  from holding MCI Management SA or generate 10.67% return on investment over 90 days.

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

MCI Management SA  vs.  Noble Financials SA

MCI Management SA

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCI Management SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, MCI Management may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Noble Financials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble Financials SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Noble Financials 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 MCI Management and Noble Financials

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

The idea behind MCI Management SA and Noble Financials SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..