Correlation Between MKDWELL Tech and Crane

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

By analyzing existing cross correlation between MKDWELL Tech Warrants and Crane Company, you can compare the effects of market volatilities on MKDWELL Tech and Crane 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 Crane. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKDWELL Tech and Crane.

Diversification Opportunities for MKDWELL Tech and Crane

0.41

Correlation Coefficient

MKDWELL Tech  Crane

Very weak diversification

The 3 months correlation between MKDWELL and Crane is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MKDWELL Tech Warrants and Crane Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crane Company 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 Warrants are associated (or correlated) with Crane. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crane Company has no effect on the direction of MKDWELL Tech i.e., MKDWELL Tech and Crane go up and down completely randomly.

Pair Corralation between MKDWELL Tech and Crane

Assuming the 90 days horizon MKDWELL Tech Warrants is expected to generate 7.27 times more return on investment than Crane. However, MKDWELL Tech is 7.27 times more volatile than Crane Company. It trades about 0.03 of its potential returns per unit of risk. Crane Company is currently generating about 0.02 per unit of risk. If you would invest  1.52  in MKDWELL Tech Warrants on December 27, 2024 and sell it today you would lose (0.42) from holding MKDWELL Tech Warrants or give up 27.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	65.57%
Values	Daily Returns

MKDWELL Tech Warrants  vs.  Crane Company

MKDWELL Tech Warrants

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MKDWELL Tech Warrants are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MKDWELL Tech showed solid returns over the last few months and may actually be approaching a breakup point.

Crane Company

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Crane Company are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Crane is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with MKDWELL Tech and Crane

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

The idea behind MKDWELL Tech Warrants and Crane Company 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.