Correlation Between Magnum Opus and Afternext Healthtech

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

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

Diversification Opportunities for Magnum Opus and Afternext Healthtech

0.87

Correlation Coefficient

Magnum Opus  Afternext Healthtech

Very poor diversification

The 3 months correlation between Magnum and Afternext is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Magnum Opus Acquisition and Afternext Healthtech Acquisiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afternext Healthtech and Magnum Opus 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 Magnum Opus Acquisition are associated (or correlated) with Afternext Healthtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afternext Healthtech has no effect on the direction of Magnum Opus i.e., Magnum Opus and Afternext Healthtech go up and down completely randomly.

Pair Corralation between Magnum Opus and Afternext Healthtech

Considering the 90-day investment horizon Magnum Opus Acquisition is expected to generate 2.65 times more return on investment than Afternext Healthtech. However, Magnum Opus is 2.65 times more volatile than Afternext Healthtech Acquisition. It trades about 0.08 of its potential returns per unit of risk. Afternext Healthtech Acquisition is currently generating about 0.18 per unit of risk. If you would invest  1,013  in Magnum Opus Acquisition on October 11, 2024 and sell it today you would earn a total of  36.00  from holding Magnum Opus Acquisition or generate 3.55% return on investment over 90 days.

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

Magnum Opus Acquisition  vs.  Afternext Healthtech Acquisiti

Magnum Opus Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magnum Opus Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Magnum Opus is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Afternext Healthtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Afternext Healthtech Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Afternext Healthtech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Magnum Opus and Afternext Healthtech

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

The idea behind Magnum Opus Acquisition and Afternext Healthtech 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.