Correlation Between MFEC PCL and Muramoto Electron

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

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

Diversification Opportunities for MFEC PCL and Muramoto Electron

0.38

Correlation Coefficient

MFEC PCL  Muramoto Electron

Weak diversification

The 3 months correlation between MFEC and Muramoto is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding MFEC PCL and Muramoto Electron Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muramoto Electron Public and MFEC PCL 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 MFEC PCL are associated (or correlated) with Muramoto Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muramoto Electron Public has no effect on the direction of MFEC PCL i.e., MFEC PCL and Muramoto Electron go up and down completely randomly.

Pair Corralation between MFEC PCL and Muramoto Electron

Assuming the 90 days trading horizon MFEC PCL is expected to under-perform the Muramoto Electron. In addition to that, MFEC PCL is 1.2 times more volatile than Muramoto Electron Public. It trades about -0.03 of its total potential returns per unit of risk. Muramoto Electron Public is currently generating about 0.05 per unit of volatility. If you would invest  16,564  in Muramoto Electron Public on December 30, 2024 and sell it today you would earn a total of  436.00  from holding Muramoto Electron Public or generate 2.63% return on investment over 90 days.

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

MFEC PCL  vs.  Muramoto Electron Public

MFEC PCL

Risk-Adjusted Performance

Very Weak

Over the last 90 days MFEC PCL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, MFEC PCL is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Muramoto Electron Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Muramoto Electron Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Muramoto Electron is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFEC PCL and Muramoto Electron

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

The idea behind MFEC PCL and Muramoto Electron 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.