Correlation Between Melcor Real and Automotive Properties

Can any of the company-specific risk be diversified away by investing in both Melcor Real and Automotive Properties 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 Melcor Real and Automotive Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Melcor Real Estate and Automotive Properties Real, you can compare the effects of market volatilities on Melcor Real and Automotive Properties 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 Melcor Real with a short position of Automotive Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melcor Real and Automotive Properties.

Diversification Opportunities for Melcor Real and Automotive Properties

-0.8

Correlation Coefficient

Melcor Real  Automotive Properties

Pay attention - limited upside

The 3 months correlation between Melcor and Automotive is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Melcor Real Estate and Automotive Properties Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automotive Properties and Melcor Real 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 Melcor Real Estate are associated (or correlated) with Automotive Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automotive Properties has no effect on the direction of Melcor Real i.e., Melcor Real and Automotive Properties go up and down completely randomly.

Pair Corralation between Melcor Real and Automotive Properties

Assuming the 90 days trading horizon Melcor Real Estate is expected to generate 1.1 times more return on investment than Automotive Properties. However, Melcor Real is 1.1 times more volatile than Automotive Properties Real. It trades about 0.1 of its potential returns per unit of risk. Automotive Properties Real is currently generating about -0.25 per unit of risk. If you would invest  486.00  in Melcor Real Estate on October 25, 2024 and sell it today you would earn a total of  39.00  from holding Melcor Real Estate or generate 8.02% return on investment over 90 days.

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

Melcor Real Estate  vs.  Automotive Properties Real

Melcor Real Estate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Melcor Real Estate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Melcor Real may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Automotive Properties

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Automotive Properties Real has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Melcor Real and Automotive Properties

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

The idea behind Melcor Real Estate and Automotive Properties Real 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.