Correlation Between Midas Special and Pabrai Wagons

Can any of the company-specific risk be diversified away by investing in both Midas Special and Pabrai Wagons 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 Midas Special and Pabrai Wagons into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Midas Special Fund and Pabrai Wagons Institutional, you can compare the effects of market volatilities on Midas Special and Pabrai Wagons 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 Midas Special with a short position of Pabrai Wagons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Midas Special and Pabrai Wagons.

Diversification Opportunities for Midas Special and Pabrai Wagons

0.29

Correlation Coefficient

Midas Special  Pabrai Wagons

Modest diversification

The 3 months correlation between Midas and Pabrai is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Midas Special Fund and Pabrai Wagons Institutional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pabrai Wagons Instit and Midas Special 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 Midas Special Fund are associated (or correlated) with Pabrai Wagons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pabrai Wagons Instit has no effect on the direction of Midas Special i.e., Midas Special and Pabrai Wagons go up and down completely randomly.

Pair Corralation between Midas Special and Pabrai Wagons

Assuming the 90 days horizon Midas Special Fund is expected to generate 0.95 times more return on investment than Pabrai Wagons. However, Midas Special Fund is 1.05 times less risky than Pabrai Wagons. It trades about 0.15 of its potential returns per unit of risk. Pabrai Wagons Institutional is currently generating about 0.04 per unit of risk. If you would invest  3,309  in Midas Special Fund on October 24, 2024 and sell it today you would earn a total of  327.00  from holding Midas Special Fund or generate 9.88% return on investment over 90 days.

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

Midas Special Fund  vs.  Pabrai Wagons Institutional

Midas Special

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Midas Special Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Midas Special may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pabrai Wagons Instit

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pabrai Wagons Institutional are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pabrai Wagons is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Midas Special and Pabrai Wagons

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

The idea behind Midas Special Fund and Pabrai Wagons Institutional 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.