Correlation Between Morgan Stanley and Neolife SA

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

Diversification Opportunities for Morgan Stanley and Neolife SA

-0.15

Correlation Coefficient

Morgan Stanley  Neolife SA

Good diversification

The 3 months correlation between Morgan and Neolife is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Neolife SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neolife 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 Neolife SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neolife SA has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Neolife SA go up and down completely randomly.

Pair Corralation between Morgan Stanley and Neolife SA

Given the investment horizon of 90 days Morgan Stanley is expected to generate 31.69 times less return on investment than Neolife SA. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.83 times less risky than Neolife SA. It trades about 0.01 of its potential returns per unit of risk. Neolife SA is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  5.62  in Neolife SA on September 25, 2024 and sell it today you would earn a total of  0.58  from holding Neolife SA or generate 10.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Morgan Stanley Direct  vs.  Neolife SA

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

Neolife SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neolife SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Neolife SA is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Morgan Stanley and Neolife SA

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

The idea behind Morgan Stanley Direct and Neolife 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.