Correlation Between Made Tech and Blackrock World

Can any of the company-specific risk be diversified away by investing in both Made Tech and Blackrock World 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 Made Tech and Blackrock World into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Made Tech Group and Blackrock World Mining, you can compare the effects of market volatilities on Made Tech and Blackrock World 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 Made Tech with a short position of Blackrock World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Made Tech and Blackrock World.

Diversification Opportunities for Made Tech and Blackrock World

-0.74

Correlation Coefficient

Made Tech  Blackrock World

Pay attention - limited upside

The 3 months correlation between Made and Blackrock is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group and Blackrock World Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Blackrock World Mining and Made Tech 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 Made Tech Group are associated (or correlated) with Blackrock World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Blackrock World Mining has no effect on the direction of Made Tech i.e., Made Tech and Blackrock World go up and down completely randomly.

Pair Corralation between Made Tech and Blackrock World

Assuming the 90 days trading horizon Made Tech Group is expected to generate 3.05 times more return on investment than Blackrock World. However, Made Tech is 3.05 times more volatile than Blackrock World Mining. It trades about 0.02 of its potential returns per unit of risk. Blackrock World Mining is currently generating about -0.05 per unit of risk. If you would invest  2,700  in Made Tech Group on October 7, 2024 and sell it today you would lose (200.00) from holding Made Tech Group or give up 7.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Made Tech Group  vs.  Blackrock World Mining

Made Tech Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

Blackrock World Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Blackrock World Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Made Tech and Blackrock World

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

The idea behind Made Tech Group and Blackrock World Mining 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.