Correlation Between MLP Group and Noble Financials

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

By analyzing existing cross correlation between MLP Group SA and Noble Financials SA, you can compare the effects of market volatilities on MLP Group and Noble Financials 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 MLP Group with a short position of Noble Financials. Check out your portfolio center. Please also check ongoing floating volatility patterns of MLP Group and Noble Financials.

Diversification Opportunities for MLP Group and Noble Financials

0.5

Correlation Coefficient

MLP Group  Noble Financials

Very weak diversification

The 3 months correlation between MLP and Noble is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding MLP Group SA and Noble Financials SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noble Financials and MLP Group 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 MLP Group SA are associated (or correlated) with Noble Financials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noble Financials has no effect on the direction of MLP Group i.e., MLP Group and Noble Financials go up and down completely randomly.

Pair Corralation between MLP Group and Noble Financials

Assuming the 90 days trading horizon MLP Group SA is expected to generate 1.22 times more return on investment than Noble Financials. However, MLP Group is 1.22 times more volatile than Noble Financials SA. It trades about 0.0 of its potential returns per unit of risk. Noble Financials SA is currently generating about -0.16 per unit of risk. If you would invest  8,100  in MLP Group SA on September 12, 2024 and sell it today you would lose (100.00) from holding MLP Group SA or give up 1.23% of portfolio value over 90 days.

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

MLP Group SA  vs.  Noble Financials SA

MLP Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MLP Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MLP Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Noble Financials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble Financials SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with MLP Group and Noble Financials

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

The idea behind MLP Group SA and Noble Financials SA 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.