Correlation Between Matrix and Malam Team

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

By analyzing existing cross correlation between Matrix and Malam Team, you can compare the effects of market volatilities on Matrix and Malam Team 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 Matrix with a short position of Malam Team. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matrix and Malam Team.

Diversification Opportunities for Matrix and Malam Team

0.95

Correlation Coefficient

Matrix  Malam Team

Almost no diversification

The 3 months correlation between Matrix and Malam is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Matrix and Malam Team in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malam Team and Matrix 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 Matrix are associated (or correlated) with Malam Team. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malam Team has no effect on the direction of Matrix i.e., Matrix and Malam Team go up and down completely randomly.

Pair Corralation between Matrix and Malam Team

Assuming the 90 days trading horizon Matrix is expected to generate 3.95 times less return on investment than Malam Team. But when comparing it to its historical volatility, Matrix is 1.28 times less risky than Malam Team. It trades about 0.1 of its potential returns per unit of risk. Malam Team is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  875,100  in Malam Team on November 19, 2024 and sell it today you would earn a total of  104,900  from holding Malam Team or generate 11.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Matrix  vs.  Malam Team

Matrix

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Matrix are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Matrix sustained solid returns over the last few months and may actually be approaching a breakup point.

Malam Team

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Malam Team are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malam Team sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matrix and Malam Team

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

The idea behind Matrix and Malam Team 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.