Correlation Between MF International and Pure Cycle

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

By analyzing existing cross correlation between mF International Limited and Pure Cycle, you can compare the effects of market volatilities on MF International and Pure Cycle 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 MF International with a short position of Pure Cycle. Check out your portfolio center. Please also check ongoing floating volatility patterns of MF International and Pure Cycle.

Diversification Opportunities for MF International and Pure Cycle

-0.63

Correlation Coefficient

MF International  Pure Cycle

Excellent diversification

The 3 months correlation between MFI and Pure is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding mF International Limited and Pure Cycle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pure Cycle and MF International 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 mF International Limited are associated (or correlated) with Pure Cycle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pure Cycle has no effect on the direction of MF International i.e., MF International and Pure Cycle go up and down completely randomly.

Pair Corralation between MF International and Pure Cycle

Considering the 90-day investment horizon mF International Limited is expected to generate 2.69 times more return on investment than Pure Cycle. However, MF International is 2.69 times more volatile than Pure Cycle. It trades about 0.04 of its potential returns per unit of risk. Pure Cycle is currently generating about 0.11 per unit of risk. If you would invest  63.00  in mF International Limited on October 3, 2024 and sell it today you would earn a total of  4.00  from holding mF International Limited or generate 6.35% return on investment over 90 days.

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

mF International Limited  vs.  Pure Cycle

mF International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days mF International Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pure Cycle

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pure Cycle are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Pure Cycle displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MF International and Pure Cycle

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

The idea behind mF International Limited and Pure Cycle 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.