Correlation Between Monnari Trade and PCF Group

Can any of the company-specific risk be diversified away by investing in both Monnari Trade and PCF Group 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 PCF Group 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 PCF Group SA, you can compare the effects of market volatilities on Monnari Trade and PCF Group 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 PCF Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monnari Trade and PCF Group.

Diversification Opportunities for Monnari Trade and PCF Group

0.29

Correlation Coefficient

Monnari Trade  PCF Group

Modest diversification

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

Pair Corralation between Monnari Trade and PCF Group

Assuming the 90 days trading horizon Monnari Trade is expected to generate 44.16 times less return on investment than PCF Group. But when comparing it to its historical volatility, Monnari Trade SA is 6.23 times less risky than PCF Group. It trades about 0.03 of its potential returns per unit of risk. PCF Group SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  798.00  in PCF Group SA on December 20, 2024 and sell it today you would earn a total of  922.00  from holding PCF Group SA or generate 115.54% return on investment over 90 days.

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

Monnari Trade SA  vs.  PCF Group SA

Monnari Trade SA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monnari Trade SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

PCF Group SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PCF Group SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, PCF Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monnari Trade and PCF Group

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

The idea behind Monnari Trade SA and PCF Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.