Correlation Between MUA and QUALITY BEVERAGES

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

By analyzing existing cross correlation between MUA LTD and QUALITY BEVERAGES LTD, you can compare the effects of market volatilities on MUA and QUALITY BEVERAGES 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 QUALITY BEVERAGES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MUA and QUALITY BEVERAGES.

Diversification Opportunities for MUA and QUALITY BEVERAGES

-0.16

Correlation Coefficient

MUA  QUALITY BEVERAGES

Good diversification

The 3 months correlation between MUA and QUALITY is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding MUA LTD and QUALITY BEVERAGES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALITY BEVERAGES LTD 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 QUALITY BEVERAGES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALITY BEVERAGES LTD has no effect on the direction of MUA i.e., MUA and QUALITY BEVERAGES go up and down completely randomly.

Pair Corralation between MUA and QUALITY BEVERAGES

Assuming the 90 days trading horizon MUA is expected to generate 1.92 times less return on investment than QUALITY BEVERAGES. In addition to that, MUA is 2.09 times more volatile than QUALITY BEVERAGES LTD. It trades about 0.03 of its total potential returns per unit of risk. QUALITY BEVERAGES LTD is currently generating about 0.11 per unit of volatility. If you would invest  976.00  in QUALITY BEVERAGES LTD on September 13, 2024 and sell it today you would earn a total of  99.00  from holding QUALITY BEVERAGES LTD or generate 10.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

MUA LTD  vs.  QUALITY BEVERAGES LTD

MUA LTD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MUA LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, MUA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

QUALITY BEVERAGES LTD

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QUALITY BEVERAGES LTD are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady primary indicators, QUALITY BEVERAGES may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with MUA and QUALITY BEVERAGES

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

The idea behind MUA LTD and QUALITY BEVERAGES LTD 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..