Correlation Between Malam Team and B Communications

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

By analyzing existing cross correlation between Malam Team and B Communications, you can compare the effects of market volatilities on Malam Team and B Communications 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 Malam Team with a short position of B Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malam Team and B Communications.

Diversification Opportunities for Malam Team and B Communications

0.24

Correlation Coefficient

Malam Team  B Communications

Modest diversification

The 3 months correlation between Malam and BCOM is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Malam Team and B Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B Communications and Malam Team 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 Malam Team are associated (or correlated) with B Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B Communications has no effect on the direction of Malam Team i.e., Malam Team and B Communications go up and down completely randomly.

Pair Corralation between Malam Team and B Communications

Assuming the 90 days trading horizon Malam Team is expected to generate 0.86 times more return on investment than B Communications. However, Malam Team is 1.17 times less risky than B Communications. It trades about 0.34 of its potential returns per unit of risk. B Communications is currently generating about 0.29 per unit of risk. If you would invest  548,900  in Malam Team on August 31, 2024 and sell it today you would earn a total of  244,300  from holding Malam Team or generate 44.51% return on investment over 90 days.

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

Malam Team  vs.  B Communications

Malam Team

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Malam Team are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malam Team sustained solid returns over the last few months and may actually be approaching a breakup point.

B Communications

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in B Communications are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, B Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Malam Team and B Communications

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

The idea behind Malam Team and B Communications 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.