Correlation Between MRC Global and TransAct Technologies

Can any of the company-specific risk be diversified away by investing in both MRC Global and TransAct Technologies 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 MRC Global and TransAct Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MRC Global and TransAct Technologies Incorporated, you can compare the effects of market volatilities on MRC Global and TransAct Technologies 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 MRC Global with a short position of TransAct Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRC Global and TransAct Technologies.

Diversification Opportunities for MRC Global and TransAct Technologies

0.84

Correlation Coefficient

MRC Global  TransAct Technologies

Very poor diversification

The 3 months correlation between MRC and TransAct is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MRC Global and TransAct Technologies Incorpor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAct Technologies and MRC Global 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 MRC Global are associated (or correlated) with TransAct Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAct Technologies has no effect on the direction of MRC Global i.e., MRC Global and TransAct Technologies go up and down completely randomly.

Pair Corralation between MRC Global and TransAct Technologies

Considering the 90-day investment horizon MRC Global is expected to generate 1.93 times less return on investment than TransAct Technologies. In addition to that, MRC Global is 1.12 times more volatile than TransAct Technologies Incorporated. It trades about 0.01 of its total potential returns per unit of risk. TransAct Technologies Incorporated is currently generating about 0.01 per unit of volatility. If you would invest  397.00  in TransAct Technologies Incorporated on December 20, 2024 and sell it today you would earn a total of  1.00  from holding TransAct Technologies Incorporated or generate 0.25% return on investment over 90 days.

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

MRC Global  vs.  TransAct Technologies Incorpor

MRC Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRC Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MRC Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TransAct Technologies

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TransAct Technologies Incorporated are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, TransAct Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MRC Global and TransAct Technologies

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

The idea behind MRC Global and TransAct Technologies Incorporated 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.