Correlation Between Morgan Stanley and United Plantations

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and United Plantations 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 United Plantations 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 United Plantations Bhd, you can compare the effects of market volatilities on Morgan Stanley and United Plantations 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 United Plantations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and United Plantations.

Diversification Opportunities for Morgan Stanley and United Plantations

0.86

Correlation Coefficient

Morgan Stanley  United Plantations

Very poor diversification

The 3 months correlation between Morgan and United is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and United Plantations Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Plantations Bhd 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 United Plantations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Plantations Bhd has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and United Plantations go up and down completely randomly.

Pair Corralation between Morgan Stanley and United Plantations

Given the investment horizon of 90 days Morgan Stanley is expected to generate 4.5 times less return on investment than United Plantations. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.96 times less risky than United Plantations. It trades about 0.02 of its potential returns per unit of risk. United Plantations Bhd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,066  in United Plantations Bhd on October 2, 2024 and sell it today you would earn a total of  42.00  from holding United Plantations Bhd or generate 1.37% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  United Plantations Bhd

Morgan Stanley Direct

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

United Plantations Bhd

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in United Plantations Bhd are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, United Plantations disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and United Plantations

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

The idea behind Morgan Stanley Direct and United Plantations Bhd 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.