Correlation Between Manulife Finl and CHAR Technologies

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

By analyzing existing cross correlation between Manulife Finl Srs and CHAR Technologies, you can compare the effects of market volatilities on Manulife Finl and CHAR Technologies 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 Manulife Finl with a short position of CHAR Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Manulife Finl and CHAR Technologies.

Diversification Opportunities for Manulife Finl and CHAR Technologies

0.81

Correlation Coefficient

Manulife Finl  CHAR Technologies

Very poor diversification

The 3 months correlation between Manulife and CHAR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Manulife Finl Srs and CHAR Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHAR Technologies and Manulife Finl 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 Manulife Finl Srs are associated (or correlated) with CHAR Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHAR Technologies has no effect on the direction of Manulife Finl i.e., Manulife Finl and CHAR Technologies go up and down completely randomly.

Pair Corralation between Manulife Finl and CHAR Technologies

Assuming the 90 days trading horizon Manulife Finl Srs is expected to generate 0.1 times more return on investment than CHAR Technologies. However, Manulife Finl Srs is 10.02 times less risky than CHAR Technologies. It trades about -0.15 of its potential returns per unit of risk. CHAR Technologies is currently generating about -0.04 per unit of risk. If you would invest  2,049  in Manulife Finl Srs on September 4, 2024 and sell it today you would lose (109.00) from holding Manulife Finl Srs or give up 5.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Manulife Finl Srs  vs.  CHAR Technologies

Manulife Finl Srs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Manulife Finl Srs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Manulife Finl is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CHAR Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CHAR Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Manulife Finl and CHAR Technologies

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

The idea behind Manulife Finl Srs and CHAR Technologies 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.