Correlation Between Morgan Stanley and Groupe Tera

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

Diversification Opportunities for Morgan Stanley and Groupe Tera

-0.06

Correlation Coefficient

Morgan Stanley  Groupe Tera

Good diversification

The 3 months correlation between Morgan and Groupe is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Groupe Tera SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe Tera SA 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 Groupe Tera. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe Tera SA has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Groupe Tera go up and down completely randomly.

Pair Corralation between Morgan Stanley and Groupe Tera

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the Groupe Tera. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 7.36 times less risky than Groupe Tera. The stock trades about -0.01 of its potential returns per unit of risk. The Groupe Tera SA is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  190.00  in Groupe Tera SA on December 29, 2024 and sell it today you would earn a total of  190.00  from holding Groupe Tera SA or generate 100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

Morgan Stanley Direct  vs.  Groupe Tera SA

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 current stock price mess, may contribute to short-term losses for the institutional investors.

Groupe Tera SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Groupe Tera SA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Groupe Tera reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Groupe Tera

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

The idea behind Morgan Stanley Direct and Groupe Tera SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..