Correlation Between Morgan Stanley and My Chau

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

Diversification Opportunities for Morgan Stanley and My Chau

0.27

Correlation Coefficient

Morgan Stanley  My Chau

Modest diversification

The 3 months correlation between Morgan and MCP is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and My Chau Printing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on My Chau Printing 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 My Chau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of My Chau Printing has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and My Chau go up and down completely randomly.

Pair Corralation between Morgan Stanley and My Chau

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.08 times less return on investment than My Chau. But when comparing it to its historical volatility, Morgan Stanley Direct is 2.46 times less risky than My Chau. It trades about 0.07 of its potential returns per unit of risk. My Chau Printing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,810,000  in My Chau Printing on December 5, 2024 and sell it today you would earn a total of  140,000  from holding My Chau Printing or generate 4.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Morgan Stanley Direct  vs.  My Chau Printing

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.

My Chau Printing

Risk-Adjusted Performance

Very Weak

Over the last 90 days My Chau Printing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, My Chau is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and My Chau

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

The idea behind Morgan Stanley Direct and My Chau Printing 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.