Correlation Between MDJH Old and Colabor

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

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

Diversification Opportunities for MDJH Old and Colabor

0.04

Correlation Coefficient

MDJH Old  Colabor

Significant diversification

The 3 months correlation between MDJH and Colabor is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding MDJH Old and Colabor Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colabor Group and MDJH Old 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 MDJH Old are associated (or correlated) with Colabor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colabor Group has no effect on the direction of MDJH Old i.e., MDJH Old and Colabor go up and down completely randomly.

Pair Corralation between MDJH Old and Colabor

Given the investment horizon of 90 days MDJH Old is expected to generate 7.61 times more return on investment than Colabor. However, MDJH Old is 7.61 times more volatile than Colabor Group. It trades about 0.11 of its potential returns per unit of risk. Colabor Group is currently generating about 0.08 per unit of risk. If you would invest  20.00  in MDJH Old on December 28, 2024 and sell it today you would earn a total of  4.00  from holding MDJH Old or generate 20.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	40.0%
Values	Daily Returns

MDJH Old  vs.  Colabor Group

MDJH Old

Risk-Adjusted Performance

OK

Over the last 90 days MDJH Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly unfluctuating forward-looking indicators, MDJH Old demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Colabor Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Colabor Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating technical and fundamental indicators, Colabor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MDJH Old and Colabor

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

The idea behind MDJH Old and Colabor Group 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.