Correlation Between MFF Capital and Ras Technology

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

By analyzing existing cross correlation between MFF Capital Investments and Ras Technology Holdings, you can compare the effects of market volatilities on MFF Capital and Ras Technology 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 MFF Capital with a short position of Ras Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Ras Technology.

Diversification Opportunities for MFF Capital and Ras Technology

-0.89

Correlation Coefficient

MFF Capital  Ras Technology

Pay attention - limited upside

The 3 months correlation between MFF and Ras is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments and Ras Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ras Technology Holdings and MFF Capital 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 MFF Capital Investments are associated (or correlated) with Ras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ras Technology Holdings has no effect on the direction of MFF Capital i.e., MFF Capital and Ras Technology go up and down completely randomly.

Pair Corralation between MFF Capital and Ras Technology

Assuming the 90 days trading horizon MFF Capital is expected to generate 1.24 times less return on investment than Ras Technology. But when comparing it to its historical volatility, MFF Capital Investments is 3.76 times less risky than Ras Technology. It trades about 0.15 of its potential returns per unit of risk. Ras Technology Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  42.00  in Ras Technology Holdings on November 19, 2024 and sell it today you would earn a total of  32.00  from holding Ras Technology Holdings or generate 76.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

MFF Capital Investments  vs.  Ras Technology Holdings

MFF Capital Investments

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFF Capital Investments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MFF Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ras Technology Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ras Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MFF Capital and Ras Technology

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

The idea behind MFF Capital Investments and Ras Technology Holdings 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.