Correlation Between Morgan Stanley and Navamedic ASA

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

Diversification Opportunities for Morgan Stanley and Navamedic ASA

-0.64

Correlation Coefficient

Morgan Stanley  Navamedic ASA

Excellent diversification

The 3 months correlation between Morgan and Navamedic is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Navamedic ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navamedic ASA 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 Navamedic ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navamedic ASA has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Navamedic ASA go up and down completely randomly.

Pair Corralation between Morgan Stanley and Navamedic ASA

Given the investment horizon of 90 days Morgan Stanley is expected to generate 9.95 times less return on investment than Navamedic ASA. But when comparing it to its historical volatility, Morgan Stanley Direct is 3.48 times less risky than Navamedic ASA. It trades about 0.05 of its potential returns per unit of risk. Navamedic ASA is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  2,400  in Navamedic ASA on October 7, 2024 and sell it today you would earn a total of  190.00  from holding Navamedic ASA or generate 7.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	85.0%
Values	Daily Returns

Morgan Stanley Direct  vs.  Navamedic ASA

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

Navamedic ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Navamedic ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Morgan Stanley and Navamedic ASA

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

The idea behind Morgan Stanley Direct and Navamedic ASA 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.