Correlation Between MKDWELL Tech and Nordson

Can any of the company-specific risk be diversified away by investing in both MKDWELL Tech and Nordson 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 Nordson 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 Nordson, you can compare the effects of market volatilities on MKDWELL Tech and Nordson 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 Nordson. Check out your portfolio center. Please also check ongoing floating volatility patterns of MKDWELL Tech and Nordson.

Diversification Opportunities for MKDWELL Tech and Nordson

0.49

Correlation Coefficient

MKDWELL Tech  Nordson

Very weak diversification

The 3 months correlation between MKDWELL and Nordson is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding MKDWELL Tech Warrants and Nordson in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordson 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 Nordson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordson has no effect on the direction of MKDWELL Tech i.e., MKDWELL Tech and Nordson go up and down completely randomly.

Pair Corralation between MKDWELL Tech and Nordson

Assuming the 90 days horizon MKDWELL Tech Warrants is expected to generate 12.89 times more return on investment than Nordson. However, MKDWELL Tech is 12.89 times more volatile than Nordson. It trades about 0.07 of its potential returns per unit of risk. Nordson is currently generating about -0.03 per unit of risk. If you would invest  1.56  in MKDWELL Tech Warrants on December 29, 2024 and sell it today you would lose (0.12) from holding MKDWELL Tech Warrants or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	62.3%
Values	Daily Returns

MKDWELL Tech Warrants  vs.  Nordson

MKDWELL Tech Warrants

Risk-Adjusted Performance

Modest

Over the last 90 days MKDWELL Tech Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly abnormal basic indicators, MKDWELL Tech showed solid returns over the last few months and may actually be approaching a breakup point.

Nordson

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nordson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nordson 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 Nordson

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

The idea behind MKDWELL Tech Warrants and Nordson 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.