Correlation Between Morgan Stanley and Zhuzhou Kibing

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

Diversification Opportunities for Morgan Stanley and Zhuzhou Kibing

-0.4

Correlation Coefficient

Morgan Stanley  Zhuzhou Kibing

Very good diversification

The 3 months correlation between Morgan and Zhuzhou is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Zhuzhou Kibing Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhuzhou Kibing Group 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 Zhuzhou Kibing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhuzhou Kibing Group has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Zhuzhou Kibing go up and down completely randomly.

Pair Corralation between Morgan Stanley and Zhuzhou Kibing

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Zhuzhou Kibing. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 1.87 times less risky than Zhuzhou Kibing. The stock trades about -0.01 of its potential returns per unit of risk. The Zhuzhou Kibing Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  578.00  in Zhuzhou Kibing Group on December 28, 2024 and sell it today you would earn a total of  6.00  from holding Zhuzhou Kibing Group or generate 1.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	96.67%
Values	Daily Returns

Morgan Stanley Direct  vs.  Zhuzhou Kibing Group

Morgan Stanley Direct

Risk-Adjusted Performance

Very Weak

Over the last 90 days Morgan Stanley Direct has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Zhuzhou Kibing Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Zhuzhou Kibing Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Zhuzhou Kibing 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 Zhuzhou Kibing

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

The idea behind Morgan Stanley Direct and Zhuzhou Kibing Group 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.