Correlation Between MYT Netherlands and Launch One

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

By analyzing existing cross correlation between MYT Netherlands Parent and Launch One Acquisition, you can compare the effects of market volatilities on MYT Netherlands and Launch One 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 MYT Netherlands with a short position of Launch One. Check out your portfolio center. Please also check ongoing floating volatility patterns of MYT Netherlands and Launch One.

Diversification Opportunities for MYT Netherlands and Launch One

0.46

Correlation Coefficient

MYT Netherlands  Launch One

Very weak diversification

The 3 months correlation between MYT and Launch is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding MYT Netherlands Parent and Launch One Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Launch One Acquisition and MYT Netherlands 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 MYT Netherlands Parent are associated (or correlated) with Launch One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Launch One Acquisition has no effect on the direction of MYT Netherlands i.e., MYT Netherlands and Launch One go up and down completely randomly.

Pair Corralation between MYT Netherlands and Launch One

Given the investment horizon of 90 days MYT Netherlands is expected to generate 7.01 times less return on investment than Launch One. But when comparing it to its historical volatility, MYT Netherlands Parent is 4.89 times less risky than Launch One. It trades about 0.14 of its potential returns per unit of risk. Launch One Acquisition is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  8.00  in Launch One Acquisition on October 11, 2024 and sell it today you would earn a total of  7.00  from holding Launch One Acquisition or generate 87.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	70.73%
Values	Daily Returns

MYT Netherlands Parent  vs.  Launch One Acquisition

MYT Netherlands Parent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MYT Netherlands Parent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MYT Netherlands is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Launch One Acquisition

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Launch One Acquisition are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Launch One showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MYT Netherlands and Launch One

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

The idea behind MYT Netherlands Parent and Launch One Acquisition 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.