Correlation Between Morguard Real and K Bro

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

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

Diversification Opportunities for Morguard Real and K Bro

-0.37

Correlation Coefficient

Morguard Real  K Bro

Very good diversification

The 3 months correlation between Morguard and KBL is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Morguard Real Estate and K Bro Linen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Bro Linen and Morguard 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 Morguard Real Estate are associated (or correlated) with K Bro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Bro Linen has no effect on the direction of Morguard Real i.e., Morguard Real and K Bro go up and down completely randomly.

Pair Corralation between Morguard Real and K Bro

Assuming the 90 days trading horizon Morguard Real Estate is expected to generate 0.67 times more return on investment than K Bro. However, Morguard Real Estate is 1.5 times less risky than K Bro. It trades about 0.05 of its potential returns per unit of risk. K Bro Linen is currently generating about -0.1 per unit of risk. If you would invest  539.00  in Morguard Real Estate on December 30, 2024 and sell it today you would earn a total of  14.00  from holding Morguard Real Estate or generate 2.6% return on investment over 90 days.

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

Morguard Real Estate  vs.  K Bro Linen

Morguard Real Estate

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Morguard Real Estate are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Morguard Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

K Bro Linen

Risk-Adjusted Performance

Very Weak

Over the last 90 days K Bro Linen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Morguard Real and K Bro

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

The idea behind Morguard Real Estate and K Bro Linen 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.