Correlation Between Mundoro Capital and South Star

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

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

Diversification Opportunities for Mundoro Capital and South Star

0.18

Correlation Coefficient

Mundoro Capital  South Star

Average diversification

The 3 months correlation between Mundoro and South is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mundoro Capital and South Star Battery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Star Battery and Mundoro Capital 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 Mundoro Capital are associated (or correlated) with South Star. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Star Battery has no effect on the direction of Mundoro Capital i.e., Mundoro Capital and South Star go up and down completely randomly.

Pair Corralation between Mundoro Capital and South Star

Assuming the 90 days horizon Mundoro Capital is expected to under-perform the South Star. But the otc stock apears to be less risky and, when comparing its historical volatility, Mundoro Capital is 1.35 times less risky than South Star. The otc stock trades about -0.06 of its potential returns per unit of risk. The South Star Battery is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  44.00  in South Star Battery on September 4, 2024 and sell it today you would lose (5.00) from holding South Star Battery or give up 11.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Mundoro Capital  vs.  South Star Battery

Mundoro Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mundoro Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

South Star Battery

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mundoro Capital and South Star

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

The idea behind Mundoro Capital and South Star Battery 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.