Correlation Between Morgan Advanced and Octopus Aim

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

By analyzing existing cross correlation between Morgan Advanced Materials and Octopus Aim Vct, you can compare the effects of market volatilities on Morgan Advanced and Octopus Aim 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 Morgan Advanced with a short position of Octopus Aim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Advanced and Octopus Aim.

Diversification Opportunities for Morgan Advanced and Octopus Aim

0.71

Correlation Coefficient

Morgan Advanced  Octopus Aim

Poor diversification

The 3 months correlation between Morgan and Octopus is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Advanced Materials and Octopus Aim Vct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Octopus Aim Vct and Morgan Advanced 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 Morgan Advanced Materials are associated (or correlated) with Octopus Aim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Octopus Aim Vct has no effect on the direction of Morgan Advanced i.e., Morgan Advanced and Octopus Aim go up and down completely randomly.

Pair Corralation between Morgan Advanced and Octopus Aim

Assuming the 90 days trading horizon Morgan Advanced Materials is expected to under-perform the Octopus Aim. In addition to that, Morgan Advanced is 6.58 times more volatile than Octopus Aim Vct. It trades about -0.14 of its total potential returns per unit of risk. Octopus Aim Vct is currently generating about -0.17 per unit of volatility. If you would invest  4,925  in Octopus Aim Vct on December 23, 2024 and sell it today you would lose (205.00) from holding Octopus Aim Vct or give up 4.16% of portfolio value over 90 days.

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

Morgan Advanced Materials  vs.  Octopus Aim Vct

Morgan Advanced Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Advanced Materials 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 basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Octopus Aim Vct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Octopus Aim Vct has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Octopus Aim is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Morgan Advanced and Octopus Aim

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

The idea behind Morgan Advanced Materials and Octopus Aim Vct 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.