Correlation Between MFC Nichada and Eureka Design

Can any of the company-specific risk be diversified away by investing in both MFC Nichada and Eureka Design 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 Eureka Design 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 Eureka Design Public, you can compare the effects of market volatilities on MFC Nichada and Eureka Design 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 Eureka Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Nichada and Eureka Design.

Diversification Opportunities for MFC Nichada and Eureka Design

0.63

Correlation Coefficient

MFC Nichada  Eureka Design

Poor diversification

The 3 months correlation between MFC and Eureka is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MFC Nichada Thani Property and Eureka Design Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eureka Design Public 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 Eureka Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eureka Design Public has no effect on the direction of MFC Nichada i.e., MFC Nichada and Eureka Design go up and down completely randomly.

Pair Corralation between MFC Nichada and Eureka Design

Assuming the 90 days trading horizon MFC Nichada is expected to generate 3.04 times less return on investment than Eureka Design. But when comparing it to its historical volatility, MFC Nichada Thani Property is 2.99 times less risky than Eureka Design. It trades about 0.18 of its potential returns per unit of risk. Eureka Design Public is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  72.00  in Eureka Design Public on October 8, 2024 and sell it today you would earn a total of  11.00  from holding Eureka Design Public or generate 15.28% return on investment over 90 days.

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

MFC Nichada Thani Property  vs.  Eureka Design Public

MFC Nichada Thani

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Nichada Thani Property are ranked lower than 4 (%) 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 February 2025.

Eureka Design Public

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eureka Design Public are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental drivers, Eureka Design sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MFC Nichada and Eureka Design

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

The idea behind MFC Nichada Thani Property and Eureka Design Public 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.