Correlation Between Mlk Foods and Kruk SA

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

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

Diversification Opportunities for Mlk Foods and Kruk SA

0.36

Correlation Coefficient

Mlk Foods  Kruk SA

Weak diversification

The 3 months correlation between Mlk and Kruk is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mlk Foods Public and Kruk SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kruk SA and Mlk Foods 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 Mlk Foods Public are associated (or correlated) with Kruk SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kruk SA has no effect on the direction of Mlk Foods i.e., Mlk Foods and Kruk SA go up and down completely randomly.

Pair Corralation between Mlk Foods and Kruk SA

Assuming the 90 days trading horizon Mlk Foods Public is expected to generate 2.32 times more return on investment than Kruk SA. However, Mlk Foods is 2.32 times more volatile than Kruk SA. It trades about 0.14 of its potential returns per unit of risk. Kruk SA is currently generating about 0.12 per unit of risk. If you would invest  115.00  in Mlk Foods Public on September 16, 2024 and sell it today you would earn a total of  9.00  from holding Mlk Foods Public or generate 7.83% return on investment over 90 days.

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

Mlk Foods Public  vs.  Kruk SA

Mlk Foods Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mlk Foods Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Mlk Foods reported solid returns over the last few months and may actually be approaching a breakup point.

Kruk SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Kruk SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Kruk SA 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 Mlk Foods and Kruk SA

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

The idea behind Mlk Foods Public and Kruk 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.