Correlation Between Morgan Stanley and MultiChoice

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

Diversification Opportunities for Morgan Stanley and MultiChoice

-0.83

Correlation Coefficient

Morgan Stanley  MultiChoice

Pay attention - limited upside

The 3 months correlation between Morgan and MultiChoice is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and MultiChoice Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MultiChoice Group 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 MultiChoice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MultiChoice Group has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and MultiChoice go up and down completely randomly.

Pair Corralation between Morgan Stanley and MultiChoice

Given the investment horizon of 90 days Morgan Stanley Direct is expected to under-perform the MultiChoice. In addition to that, Morgan Stanley is 2.41 times more volatile than MultiChoice Group. It trades about -0.04 of its total potential returns per unit of risk. MultiChoice Group is currently generating about 0.13 per unit of volatility. If you would invest  1,082,400  in MultiChoice Group on October 14, 2024 and sell it today you would earn a total of  10,500  from holding MultiChoice Group or generate 0.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Morgan Stanley Direct  vs.  MultiChoice Group

Morgan Stanley Direct

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The newest stock price mess, may contribute to short-term losses for the institutional investors.

MultiChoice Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MultiChoice Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MultiChoice is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Morgan Stanley and MultiChoice

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

The idea behind Morgan Stanley Direct and MultiChoice Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.