Correlation Between Morgan Stanley and KIM KINDEX

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

Diversification Opportunities for Morgan Stanley and KIM KINDEX

0.49

Correlation Coefficient

Morgan Stanley  KIM KINDEX

Very weak diversification

The 3 months correlation between Morgan and KIM is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and KIM KINDEX Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM KINDEX Japan 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 KIM KINDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM KINDEX Japan has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and KIM KINDEX go up and down completely randomly.

Pair Corralation between Morgan Stanley and KIM KINDEX

Given the investment horizon of 90 days Morgan Stanley is expected to generate 2.1 times less return on investment than KIM KINDEX. In addition to that, Morgan Stanley is 1.15 times more volatile than KIM KINDEX Japan. It trades about 0.03 of its total potential returns per unit of risk. KIM KINDEX Japan is currently generating about 0.08 per unit of volatility. If you would invest  1,729,000  in KIM KINDEX Japan on September 25, 2024 and sell it today you would earn a total of  1,048,000  from holding KIM KINDEX Japan or generate 60.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	48.03%
Values	Daily Returns

Morgan Stanley Direct  vs.  KIM KINDEX Japan

Morgan Stanley Direct

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 9 (%) 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.

KIM KINDEX Japan

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIM KINDEX Japan are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, KIM KINDEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and KIM KINDEX

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

The idea behind Morgan Stanley Direct and KIM KINDEX Japan 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..