Correlation Between Mida Assets and IT City

Can any of the company-specific risk be diversified away by investing in both Mida Assets and IT City 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 Mida Assets and IT City into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Mida Assets and IT City

0.77

Correlation Coefficient

Mida Assets  IT City

Poor diversification

The 3 months correlation between Mida and IT City is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mida Assets Public and IT City Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IT City Public and Mida Assets 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 Mida Assets Public are associated (or correlated) with IT City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IT City Public has no effect on the direction of Mida Assets i.e., Mida Assets and IT City go up and down completely randomly.

Pair Corralation between Mida Assets and IT City

Assuming the 90 days trading horizon Mida Assets Public is expected to generate 2.25 times more return on investment than IT City. However, Mida Assets is 2.25 times more volatile than IT City Public. It trades about -0.04 of its potential returns per unit of risk. IT City Public is currently generating about -0.12 per unit of risk. If you would invest  32.00  in Mida Assets Public on December 21, 2024 and sell it today you would lose (6.00) from holding Mida Assets Public or give up 18.75% of portfolio value over 90 days.

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

Mida Assets Public  vs.  IT City Public

Mida Assets Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mida Assets Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

IT City Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days IT City Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mida Assets and IT City

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

The idea behind Mida Assets Public and IT City 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.