Correlation Between Morgan Stanley and KAT Exploration
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and KAT Exploration 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 KAT Exploration 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 KAT Exploration, you can compare the effects of market volatilities on Morgan Stanley and KAT Exploration 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 KAT Exploration. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and KAT Exploration.
Diversification Opportunities for Morgan Stanley and KAT Exploration
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Morgan and KAT is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and KAT Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KAT Exploration 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 KAT Exploration. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KAT Exploration has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and KAT Exploration go up and down completely randomly.
Pair Corralation between Morgan Stanley and KAT Exploration
Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the KAT Exploration. But the stock apears to be less risky and, when comparing its historical volatility, Morgan Stanley Direct is 9.71 times less risky than KAT Exploration. The stock trades about -0.23 of its potential returns per unit of risk. The KAT Exploration is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.04 in KAT Exploration on December 4, 2024 and sell it today you would earn a total of 0.00 from holding KAT Exploration or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.45% |
Values | Daily Returns |
Morgan Stanley Direct vs. KAT Exploration
Performance |
Timeline |
Morgan Stanley Direct |
KAT Exploration |
Morgan Stanley and KAT Exploration Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Morgan Stanley and KAT Exploration
The main advantage of trading using opposite Morgan Stanley and KAT Exploration positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, KAT Exploration 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 KAT Exploration will offset losses from the drop in KAT Exploration's long position.Morgan Stanley vs. Harmony Gold Mining | Morgan Stanley vs. RTG Mining | Morgan Stanley vs. Brandywine Realty Trust | Morgan Stanley vs. Mangazeya Mining |
KAT Exploration vs. Southern ITS International | KAT Exploration vs. UHF Logistics Group | KAT Exploration vs. Intl Star | KAT Exploration vs. Church Crawford |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |