Correlation Between Morgan Advanced and Lendway

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

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

Diversification Opportunities for Morgan Advanced and Lendway

-0.22

Correlation Coefficient

Morgan Advanced  Lendway

Very good diversification

The 3 months correlation between Morgan and Lendway is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Lendway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendway and Morgan Advanced 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 Morgan Advanced Materials are associated (or correlated) with Lendway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendway has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Lendway go up and down completely randomly.

Pair Corralation between Morgan Advanced and Lendway

Assuming the 90 days horizon Morgan Advanced Materials is expected to under-perform the Lendway. But the pink sheet apears to be less risky and, when comparing its historical volatility, Morgan Advanced Materials is 1.9 times less risky than Lendway. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Lendway is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  350.00  in Lendway on October 26, 2024 and sell it today you would earn a total of  83.00  from holding Lendway or generate 23.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Morgan Advanced Materials  vs.  Lendway

Morgan Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Advanced Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Lendway

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lendway are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Lendway showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Advanced and Lendway

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

The idea behind Morgan Advanced Materials and Lendway 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.