Correlation Between Monnari Trade and Esotiq Henderson

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

By analyzing existing cross correlation between Monnari Trade SA and Esotiq Henderson SA, you can compare the effects of market volatilities on Monnari Trade and Esotiq Henderson 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 Monnari Trade with a short position of Esotiq Henderson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monnari Trade and Esotiq Henderson.

Diversification Opportunities for Monnari Trade and Esotiq Henderson

0.64

Correlation Coefficient

Monnari Trade  Esotiq Henderson

Poor diversification

The 3 months correlation between Monnari and Esotiq is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Monnari Trade SA and Esotiq Henderson SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Esotiq Henderson and Monnari Trade 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 Monnari Trade SA are associated (or correlated) with Esotiq Henderson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Esotiq Henderson has no effect on the direction of Monnari Trade i.e., Monnari Trade and Esotiq Henderson go up and down completely randomly.

Pair Corralation between Monnari Trade and Esotiq Henderson

Assuming the 90 days trading horizon Monnari Trade SA is expected to under-perform the Esotiq Henderson. But the stock apears to be less risky and, when comparing its historical volatility, Monnari Trade SA is 1.74 times less risky than Esotiq Henderson. The stock trades about -0.03 of its potential returns per unit of risk. The Esotiq Henderson SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,040  in Esotiq Henderson SA on September 13, 2024 and sell it today you would lose (190.00) from holding Esotiq Henderson SA or give up 4.7% of portfolio value over 90 days.

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

Monnari Trade SA  vs.  Esotiq Henderson SA

Monnari Trade SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monnari Trade SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Monnari Trade is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Esotiq Henderson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Esotiq Henderson SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Esotiq Henderson is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Monnari Trade and Esotiq Henderson

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

The idea behind Monnari Trade SA and Esotiq Henderson SA 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.