Correlation Between Morgan Stanley and Kings Town

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

Diversification Opportunities for Morgan Stanley and Kings Town

-0.67

Correlation Coefficient

Morgan Stanley  Kings Town

Excellent diversification

The 3 months correlation between Morgan and Kings is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Kings Town Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kings Town Construction 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 Kings Town. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kings Town Construction has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Kings Town go up and down completely randomly.

Pair Corralation between Morgan Stanley and Kings Town

Given the investment horizon of 90 days Morgan Stanley is expected to generate 6.3 times less return on investment than Kings Town. But when comparing it to its historical volatility, Morgan Stanley Direct is 2.52 times less risky than Kings Town. It trades about 0.04 of its potential returns per unit of risk. Kings Town Construction is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,170  in Kings Town Construction on September 19, 2024 and sell it today you would earn a total of  3,640  from holding Kings Town Construction or generate 114.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	94.21%
Values	Daily Returns

Morgan Stanley Direct  vs.  Kings Town Construction

Morgan Stanley Direct

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kings Town Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kings Town Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Morgan Stanley and Kings Town

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

The idea behind Morgan Stanley Direct and Kings Town Construction 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..