Correlation Between Morningstar Unconstrained and Lai Sun

Can any of the company-specific risk be diversified away by investing in both Morningstar Unconstrained and Lai Sun 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 Morningstar Unconstrained and Lai Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morningstar Unconstrained Allocation and Lai Sun Development, you can compare the effects of market volatilities on Morningstar Unconstrained and Lai Sun 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 Morningstar Unconstrained with a short position of Lai Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morningstar Unconstrained and Lai Sun.

Diversification Opportunities for Morningstar Unconstrained and Lai Sun

0.0

Correlation Coefficient

Morningstar Unconstrained  Lai Sun

Pay attention - limited upside

The 3 months correlation between Morningstar and Lai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Morningstar Unconstrained Allo and Lai Sun Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lai Sun Development and Morningstar Unconstrained 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 Morningstar Unconstrained Allocation are associated (or correlated) with Lai Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lai Sun Development has no effect on the direction of Morningstar Unconstrained i.e., Morningstar Unconstrained and Lai Sun go up and down completely randomly.

Pair Corralation between Morningstar Unconstrained and Lai Sun

Assuming the 90 days horizon Morningstar Unconstrained Allocation is expected to generate 0.34 times more return on investment than Lai Sun. However, Morningstar Unconstrained Allocation is 2.94 times less risky than Lai Sun. It trades about 0.03 of its potential returns per unit of risk. Lai Sun Development is currently generating about -0.04 per unit of risk. If you would invest  949.00  in Morningstar Unconstrained Allocation on October 7, 2024 and sell it today you would earn a total of  99.00  from holding Morningstar Unconstrained Allocation or generate 10.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.6%
Values	Daily Returns

Morningstar Unconstrained Allo  vs.  Lai Sun Development

Morningstar Unconstrained

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Morningstar Unconstrained Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Lai Sun Development

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lai Sun Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Lai Sun is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morningstar Unconstrained and Lai Sun

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

The idea behind Morningstar Unconstrained Allocation and Lai Sun Development 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.