Correlation Between Morgan Stanley and Lung Hwa
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Lung 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 Lung 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 Lung Hwa Electronics, you can compare the effects of market volatilities on Morgan Stanley and Lung 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 Lung Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Lung Hwa.
Diversification Opportunities for Morgan Stanley and Lung Hwa
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Morgan and Lung is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Lung Hwa Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lung Hwa Electronics 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 Lung Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lung Hwa Electronics has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Lung Hwa go up and down completely randomly.
Pair Corralation between Morgan Stanley and Lung Hwa
Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Lung Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 2.28 times less risky than Lung Hwa. The stock trades about -0.01 of its potential returns per unit of risk. The Lung Hwa Electronics is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,390 in Lung Hwa Electronics on December 28, 2024 and sell it today you would earn a total of 650.00 from holding Lung Hwa Electronics or generate 10.17% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 91.67% |
Values | Daily Returns |
Morgan Stanley Direct vs. Lung Hwa Electronics
Performance |
Timeline |
Morgan Stanley Direct |
Lung Hwa Electronics |
Morgan Stanley and Lung Hwa Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and Lung Hwa
The main advantage of trading using opposite Morgan Stanley and Lung Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Lung 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 Lung Hwa will offset losses from the drop in Lung Hwa's long position.Morgan Stanley vs. NETGEAR | Morgan Stanley vs. Jerash Holdings | Morgan Stanley vs. AYRO Inc | Morgan Stanley vs. Mediaco Holding |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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