Correlation Between MFC Nichada and DTC Industries

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

Diversification Opportunities for MFC Nichada and DTC Industries

-0.29

Correlation Coefficient

MFC Nichada  DTC Industries

Very good diversification

The 3 months correlation between MFC and DTC is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding MFC Nichada Thani Property and DTC Industries Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DTC Industries 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 DTC Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DTC Industries Public has no effect on the direction of MFC Nichada i.e., MFC Nichada and DTC Industries go up and down completely randomly.

Pair Corralation between MFC Nichada and DTC Industries

Assuming the 90 days trading horizon MFC Nichada Thani Property is expected to generate 40.29 times more return on investment than DTC Industries. However, MFC Nichada is 40.29 times more volatile than DTC Industries Public. It trades about 0.39 of its potential returns per unit of risk. DTC Industries Public is currently generating about 0.02 per unit of risk. If you would invest  0.00  in MFC Nichada Thani Property on December 28, 2024 and sell it today you would earn a total of  492.00  from holding MFC Nichada Thani Property or generate 9.223372036854776E16% return on investment over 90 days.

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

MFC Nichada Thani Property  vs.  DTC Industries Public

MFC Nichada Thani

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Nichada Thani Property are ranked lower than 30 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, MFC Nichada sustained solid returns over the last few months and may actually be approaching a breakup point.

DTC Industries Public

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DTC Industries Public are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, DTC Industries may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with MFC Nichada and DTC Industries

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

The idea behind MFC Nichada Thani Property and DTC Industries 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.