Correlation Between Morgan Stanley and Omesti Bhd

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

Diversification Opportunities for Morgan Stanley and Omesti Bhd

-0.27

Correlation Coefficient

Morgan Stanley  Omesti Bhd

Very good diversification

The 3 months correlation between Morgan and Omesti is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Omesti Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omesti 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 Omesti Bhd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omesti Bhd has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Omesti Bhd go up and down completely randomly.

Pair Corralation between Morgan Stanley and Omesti Bhd

Given the investment horizon of 90 days Morgan Stanley is expected to generate 71.14 times less return on investment than Omesti Bhd. But when comparing it to its historical volatility, Morgan Stanley Direct is 11.13 times less risky than Omesti Bhd. It trades about 0.05 of its potential returns per unit of risk. Omesti Bhd is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  7.00  in Omesti Bhd on September 26, 2024 and sell it today you would earn a total of  7.00  from holding Omesti Bhd or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Morgan Stanley Direct  vs.  Omesti Bhd

Morgan Stanley Direct

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 10 (%) 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.

Omesti Bhd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omesti Bhd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Omesti Bhd disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Omesti Bhd

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

The idea behind Morgan Stanley Direct and Omesti 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.