Correlation Between MFC Nichada and MFC Strategic

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

By analyzing existing cross correlation between MFC Nichada Thani Property and MFC Strategic Storage, you can compare the effects of market volatilities on MFC Nichada and MFC Strategic 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 MFC Nichada with a short position of MFC Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Nichada and MFC Strategic.

Diversification Opportunities for MFC Nichada and MFC Strategic

0.06

Correlation Coefficient

MFC Nichada  MFC Strategic

Significant diversification

The 3 months correlation between MFC and MFC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding MFC Nichada Thani Property and MFC Strategic Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Strategic Storage and MFC Nichada 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 MFC Nichada Thani Property are associated (or correlated) with MFC Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Strategic Storage has no effect on the direction of MFC Nichada i.e., MFC Nichada and MFC Strategic go up and down completely randomly.

Pair Corralation between MFC Nichada and MFC Strategic

Assuming the 90 days trading horizon MFC Nichada is expected to generate 1344.46 times less return on investment than MFC Strategic. But when comparing it to its historical volatility, MFC Nichada Thani Property is 184.45 times less risky than MFC Strategic. It trades about 0.06 of its potential returns per unit of risk. MFC Strategic Storage is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest  769.00  in MFC Strategic Storage on September 5, 2024 and sell it today you would lose (24.00) from holding MFC Strategic Storage or give up 3.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.13%
Values	Daily Returns

MFC Nichada Thani Property  vs.  MFC Strategic Storage

MFC Nichada Thani

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Nichada Thani Property are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MFC Nichada may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MFC Strategic Storage

Risk-Adjusted Performance

36 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Strategic Storage are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MFC Strategic sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MFC Nichada and MFC Strategic

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

The idea behind MFC Nichada Thani Property and MFC Strategic Storage 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.