Correlation Between Morgan Stanley and Afi Properties

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

Diversification Opportunities for Morgan Stanley and Afi Properties

0.37

Correlation Coefficient

Morgan Stanley  Afi Properties

Weak diversification

The 3 months correlation between Morgan and Afi is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Afi Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afi Properties 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 Afi Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afi Properties has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Afi Properties go up and down completely randomly.

Pair Corralation between Morgan Stanley and Afi Properties

Given the investment horizon of 90 days Morgan Stanley is expected to generate 4.5 times less return on investment than Afi Properties. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.05 times less risky than Afi Properties. It trades about 0.05 of its potential returns per unit of risk. Afi Properties is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,695,000  in Afi Properties on October 7, 2024 and sell it today you would earn a total of  61,000  from holding Afi Properties or generate 3.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Afi Properties

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 weak fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Afi Properties

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Afi Properties are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Afi Properties may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Morgan Stanley and Afi Properties

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

The idea behind Morgan Stanley Direct and Afi Properties 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.