Correlation Between Modine Manufacturing and Prestige Wealth

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

By analyzing existing cross correlation between Modine Manufacturing and Prestige Wealth Ordinary, you can compare the effects of market volatilities on Modine Manufacturing and Prestige Wealth 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 Modine Manufacturing with a short position of Prestige Wealth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modine Manufacturing and Prestige Wealth.

Diversification Opportunities for Modine Manufacturing and Prestige Wealth

-0.19

Correlation Coefficient

Modine Manufacturing  Prestige Wealth

Good diversification

The 3 months correlation between Modine and Prestige is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Modine Manufacturing and Prestige Wealth Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prestige Wealth Ordinary and Modine Manufacturing 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 Modine Manufacturing are associated (or correlated) with Prestige Wealth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prestige Wealth Ordinary has no effect on the direction of Modine Manufacturing i.e., Modine Manufacturing and Prestige Wealth go up and down completely randomly.

Pair Corralation between Modine Manufacturing and Prestige Wealth

Considering the 90-day investment horizon Modine Manufacturing is expected to under-perform the Prestige Wealth. But the stock apears to be less risky and, when comparing its historical volatility, Modine Manufacturing is 3.77 times less risky than Prestige Wealth. The stock trades about -0.05 of its potential returns per unit of risk. The Prestige Wealth Ordinary is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  105.00  in Prestige Wealth Ordinary on October 11, 2024 and sell it today you would earn a total of  30.00  from holding Prestige Wealth Ordinary or generate 28.57% return on investment over 90 days.

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

Modine Manufacturing  vs.  Prestige Wealth Ordinary

Modine Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Modine Manufacturing 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Prestige Wealth Ordinary

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Prestige Wealth Ordinary are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Prestige Wealth displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Modine Manufacturing and Prestige Wealth

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

The idea behind Modine Manufacturing and Prestige Wealth Ordinary 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.