Correlation Between Morgan Stanley and Fuh Hwa

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Fuh Hwa 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 Morgan Stanley and Fuh Hwa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley Direct and Fuh Hwa FTSE, you can compare the effects of market volatilities on Morgan Stanley and Fuh Hwa 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 Morgan Stanley with a short position of Fuh Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Fuh Hwa.

Diversification Opportunities for Morgan Stanley and Fuh Hwa

-0.87

Correlation Coefficient

Morgan Stanley  Fuh Hwa

Pay attention - limited upside

The 3 months correlation between Morgan and Fuh is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Fuh Hwa FTSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuh Hwa FTSE and Morgan Stanley 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 Morgan Stanley Direct are associated (or correlated) with Fuh Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuh Hwa FTSE has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Fuh Hwa go up and down completely randomly.

Pair Corralation between Morgan Stanley and Fuh Hwa

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 1.75 times more return on investment than Fuh Hwa. However, Morgan Stanley is 1.75 times more volatile than Fuh Hwa FTSE. It trades about 0.04 of its potential returns per unit of risk. Fuh Hwa FTSE is currently generating about 0.06 per unit of risk. If you would invest  1,907  in Morgan Stanley Direct on September 29, 2024 and sell it today you would earn a total of  228.00  from holding Morgan Stanley Direct or generate 11.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	48.86%
Values	Daily Returns

Morgan Stanley Direct  vs.  Fuh Hwa FTSE

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Fuh Hwa FTSE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fuh Hwa FTSE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Morgan Stanley and Fuh Hwa

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

The idea behind Morgan Stanley Direct and Fuh Hwa FTSE 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.