Correlation Between Military Insurance and Mekong Fisheries

Can any of the company-specific risk be diversified away by investing in both Military Insurance and Mekong Fisheries 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 Military Insurance and Mekong Fisheries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Military Insurance Corp and Mekong Fisheries JSC, you can compare the effects of market volatilities on Military Insurance and Mekong Fisheries 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 Military Insurance with a short position of Mekong Fisheries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Military Insurance and Mekong Fisheries.

Diversification Opportunities for Military Insurance and Mekong Fisheries

0.28

Correlation Coefficient

Military Insurance  Mekong Fisheries

Modest diversification

The 3 months correlation between Military and Mekong is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Military Insurance Corp and Mekong Fisheries JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mekong Fisheries JSC and Military Insurance 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 Military Insurance Corp are associated (or correlated) with Mekong Fisheries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mekong Fisheries JSC has no effect on the direction of Military Insurance i.e., Military Insurance and Mekong Fisheries go up and down completely randomly.

Pair Corralation between Military Insurance and Mekong Fisheries

Assuming the 90 days trading horizon Military Insurance Corp is expected to under-perform the Mekong Fisheries. But the stock apears to be less risky and, when comparing its historical volatility, Military Insurance Corp is 1.52 times less risky than Mekong Fisheries. The stock trades about -0.18 of its potential returns per unit of risk. The Mekong Fisheries JSC is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  712,000  in Mekong Fisheries JSC on October 26, 2024 and sell it today you would lose (5,000) from holding Mekong Fisheries JSC or give up 0.7% of portfolio value over 90 days.

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

Military Insurance Corp  vs.  Mekong Fisheries JSC

Military Insurance Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Military Insurance Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Military Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mekong Fisheries JSC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mekong Fisheries JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Mekong Fisheries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Military Insurance and Mekong Fisheries

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

The idea behind Military Insurance Corp and Mekong Fisheries JSC 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.