Correlation Between MG Plc and BH Macro

Can any of the company-specific risk be diversified away by investing in both MG Plc and BH Macro 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 MG Plc and BH Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MG Plc and BH Macro Limited, you can compare the effects of market volatilities on MG Plc and BH Macro 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 MG Plc with a short position of BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of MG Plc and BH Macro.

Diversification Opportunities for MG Plc and BH Macro

-0.85

Correlation Coefficient

MG Plc  BH Macro

Pay attention - limited upside

The 3 months correlation between MNG and BHMU is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding MG Plc and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited and MG Plc 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 MG Plc are associated (or correlated) with BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of MG Plc i.e., MG Plc and BH Macro go up and down completely randomly.

Pair Corralation between MG Plc and BH Macro

Assuming the 90 days trading horizon MG Plc is expected to generate 1.16 times more return on investment than BH Macro. However, MG Plc is 1.16 times more volatile than BH Macro Limited. It trades about 0.14 of its potential returns per unit of risk. BH Macro Limited is currently generating about -0.14 per unit of risk. If you would invest  18,361  in MG Plc on December 29, 2024 and sell it today you would earn a total of  1,979  from holding MG Plc or generate 10.78% return on investment over 90 days.

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

MG Plc  vs.  BH Macro Limited

MG Plc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MG Plc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, MG Plc may actually be approaching a critical reversion point that can send shares even higher in April 2025.

BH Macro Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days BH Macro Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with MG Plc and BH Macro

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

The idea behind MG Plc and BH Macro Limited 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.