Correlation Between MFC Industrial and Muramoto Electron

Can any of the company-specific risk be diversified away by investing in both MFC Industrial and Muramoto Electron 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 MFC Industrial and Muramoto Electron into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MFC Industrial Real and Muramoto Electron Public, you can compare the effects of market volatilities on MFC Industrial and Muramoto Electron 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 MFC Industrial with a short position of Muramoto Electron. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and Muramoto Electron.

Diversification Opportunities for MFC Industrial and Muramoto Electron

-0.15

Correlation Coefficient

MFC Industrial  Muramoto Electron

Good diversification

The 3 months correlation between MFC and Muramoto is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Real and Muramoto Electron Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Muramoto Electron Public and MFC Industrial 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 MFC Industrial Real are associated (or correlated) with Muramoto Electron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Muramoto Electron Public has no effect on the direction of MFC Industrial i.e., MFC Industrial and Muramoto Electron go up and down completely randomly.

Pair Corralation between MFC Industrial and Muramoto Electron

Assuming the 90 days trading horizon MFC Industrial Real is expected to generate 4.8 times more return on investment than Muramoto Electron. However, MFC Industrial is 4.8 times more volatile than Muramoto Electron Public. It trades about 0.06 of its potential returns per unit of risk. Muramoto Electron Public is currently generating about 0.05 per unit of risk. If you would invest  30.00  in MFC Industrial Real on December 30, 2024 and sell it today you would earn a total of  3.00  from holding MFC Industrial Real or generate 10.0% return on investment over 90 days.

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

MFC Industrial Real  vs.  Muramoto Electron Public

MFC Industrial Real

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Industrial Real are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, MFC Industrial disclosed solid returns over the last few months and may actually be approaching a breakup point.

Muramoto Electron Public

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Muramoto Electron Public are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Muramoto Electron is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MFC Industrial and Muramoto Electron

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

The idea behind MFC Industrial Real and Muramoto Electron 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.