Correlation Between MICRONIC MYDATA and VIVA WINE

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

By analyzing existing cross correlation between MICRONIC MYDATA and VIVA WINE GROUP, you can compare the effects of market volatilities on MICRONIC MYDATA and VIVA WINE 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 MICRONIC MYDATA with a short position of VIVA WINE. Check out your portfolio center. Please also check ongoing floating volatility patterns of MICRONIC MYDATA and VIVA WINE.

Diversification Opportunities for MICRONIC MYDATA and VIVA WINE

-0.44

Correlation Coefficient

MICRONIC MYDATA  VIVA WINE

Very good diversification

The 3 months correlation between MICRONIC and VIVA is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding MICRONIC MYDATA and VIVA WINE GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VIVA WINE GROUP and MICRONIC MYDATA 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 MICRONIC MYDATA are associated (or correlated) with VIVA WINE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VIVA WINE GROUP has no effect on the direction of MICRONIC MYDATA i.e., MICRONIC MYDATA and VIVA WINE go up and down completely randomly.

Pair Corralation between MICRONIC MYDATA and VIVA WINE

Assuming the 90 days trading horizon MICRONIC MYDATA is expected to generate 1.49 times more return on investment than VIVA WINE. However, MICRONIC MYDATA is 1.49 times more volatile than VIVA WINE GROUP. It trades about 0.07 of its potential returns per unit of risk. VIVA WINE GROUP is currently generating about -0.18 per unit of risk. If you would invest  3,316  in MICRONIC MYDATA on September 14, 2024 and sell it today you would earn a total of  274.00  from holding MICRONIC MYDATA or generate 8.26% return on investment over 90 days.

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

MICRONIC MYDATA  vs.  VIVA WINE GROUP

MICRONIC MYDATA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MICRONIC MYDATA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MICRONIC MYDATA may actually be approaching a critical reversion point that can send shares even higher in January 2025.

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with MICRONIC MYDATA and VIVA WINE

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

The idea behind MICRONIC MYDATA and VIVA WINE GROUP 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.