Correlation Between 3M and Mobimo Hldg

Can any of the company-specific risk be diversified away by investing in both 3M and Mobimo Hldg 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 3M and Mobimo Hldg into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 3M Company and Mobimo Hldg, you can compare the effects of market volatilities on 3M and Mobimo Hldg 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 3M with a short position of Mobimo Hldg. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3M and Mobimo Hldg.

Diversification Opportunities for 3M and Mobimo Hldg

-0.2

Correlation Coefficient

3M  Mobimo Hldg

Good diversification

The 3 months correlation between 3M and Mobimo is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding 3M Company and Mobimo Hldg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mobimo Hldg and 3M 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 3M Company are associated (or correlated) with Mobimo Hldg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mobimo Hldg has no effect on the direction of 3M i.e., 3M and Mobimo Hldg go up and down completely randomly.

Pair Corralation between 3M and Mobimo Hldg

Assuming the 90 days trading horizon 3M Company is expected to generate 3.53 times more return on investment than Mobimo Hldg. However, 3M is 3.53 times more volatile than Mobimo Hldg. It trades about 0.36 of its potential returns per unit of risk. Mobimo Hldg is currently generating about 0.39 per unit of risk. If you would invest  11,200  in 3M Company on October 20, 2024 and sell it today you would earn a total of  1,400  from holding 3M Company or generate 12.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

3M Company  vs.  Mobimo Hldg

3M Company

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 3M Company are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal primary indicators, 3M may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mobimo Hldg

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mobimo Hldg are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mobimo Hldg may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with 3M and Mobimo Hldg

The main advantage of trading using opposite 3M and Mobimo Hldg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3M position performs unexpectedly, Mobimo Hldg 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 Mobimo Hldg will offset losses from the drop in Mobimo Hldg's long position.

The idea behind 3M Company and Mobimo Hldg 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.