Correlation Between MUA and ELITE MEAT

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

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

Diversification Opportunities for MUA and ELITE MEAT

-0.39

Correlation Coefficient

MUA  ELITE MEAT

Very good diversification

The 3 months correlation between MUA and ELITE is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding MUA LTD and ELITE MEAT PROCESSORS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELITE MEAT PROCESSORS and MUA 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 MUA LTD are associated (or correlated) with ELITE MEAT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELITE MEAT PROCESSORS has no effect on the direction of MUA i.e., MUA and ELITE MEAT go up and down completely randomly.

Pair Corralation between MUA and ELITE MEAT

Assuming the 90 days trading horizon MUA LTD is expected to under-perform the ELITE MEAT. In addition to that, MUA is 1.01 times more volatile than ELITE MEAT PROCESSORS. It trades about -0.11 of its total potential returns per unit of risk. ELITE MEAT PROCESSORS is currently generating about 0.16 per unit of volatility. If you would invest  185.00  in ELITE MEAT PROCESSORS on December 21, 2024 and sell it today you would earn a total of  10.00  from holding ELITE MEAT PROCESSORS or generate 5.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

MUA LTD  vs.  ELITE MEAT PROCESSORS

MUA LTD

Risk-Adjusted Performance

Very Weak

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

ELITE MEAT PROCESSORS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ELITE MEAT PROCESSORS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, ELITE MEAT is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MUA and ELITE MEAT

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

The idea behind MUA LTD and ELITE MEAT PROCESSORS 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.