Correlation Between MKDWELL Tech and Eaton PLC

Can any of the company-specific risk be diversified away by investing in both MKDWELL Tech and Eaton PLC 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 MKDWELL Tech and Eaton PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MKDWELL Tech Ordinary and Eaton PLC, you can compare the effects of market volatilities on MKDWELL Tech and Eaton PLC 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 MKDWELL Tech with a short position of Eaton PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKDWELL Tech and Eaton PLC.

Diversification Opportunities for MKDWELL Tech and Eaton PLC

-0.46

Correlation Coefficient

MKDWELL Tech  Eaton PLC

Very good diversification

The 3 months correlation between MKDWELL and Eaton is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding MKDWELL Tech Ordinary and Eaton PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton PLC and MKDWELL Tech 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 MKDWELL Tech Ordinary are associated (or correlated) with Eaton PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton PLC has no effect on the direction of MKDWELL Tech i.e., MKDWELL Tech and Eaton PLC go up and down completely randomly.

Pair Corralation between MKDWELL Tech and Eaton PLC

Given the investment horizon of 90 days MKDWELL Tech Ordinary is expected to generate 8.01 times more return on investment than Eaton PLC. However, MKDWELL Tech is 8.01 times more volatile than Eaton PLC. It trades about 0.21 of its potential returns per unit of risk. Eaton PLC is currently generating about -0.15 per unit of risk. If you would invest  53.00  in MKDWELL Tech Ordinary on October 9, 2024 and sell it today you would earn a total of  23.00  from holding MKDWELL Tech Ordinary or generate 43.4% return on investment over 90 days.

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

MKDWELL Tech Ordinary  vs.  Eaton PLC

MKDWELL Tech Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKDWELL Tech Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Eaton PLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eaton PLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Eaton PLC is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with MKDWELL Tech and Eaton PLC

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

The idea behind MKDWELL Tech Ordinary and Eaton PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.