Correlation Between MCOT Public and CP ALL

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

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

Diversification Opportunities for MCOT Public and CP ALL

0.26

Correlation Coefficient

MCOT Public  CP ALL

Modest diversification

The 3 months correlation between MCOT and CPALL is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding MCOT Public and CP ALL Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CP ALL Public and MCOT Public 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 MCOT Public are associated (or correlated) with CP ALL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CP ALL Public has no effect on the direction of MCOT Public i.e., MCOT Public and CP ALL go up and down completely randomly.

Pair Corralation between MCOT Public and CP ALL

Assuming the 90 days trading horizon MCOT Public is expected to generate 1.81 times more return on investment than CP ALL. However, MCOT Public is 1.81 times more volatile than CP ALL Public. It trades about -0.09 of its potential returns per unit of risk. CP ALL Public is currently generating about -0.27 per unit of risk. If you would invest  670.00  in MCOT Public on October 11, 2024 and sell it today you would lose (55.00) from holding MCOT Public or give up 8.21% of portfolio value over 90 days.

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

MCOT Public  vs.  CP ALL Public

MCOT Public

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MCOT Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MCOT Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

CP ALL Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CP ALL Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MCOT Public and CP ALL

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

The idea behind MCOT Public and CP ALL Public 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.