Correlation Between Ovation Science and MPX International

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

By analyzing existing cross correlation between Ovation Science and MPX International Corp, you can compare the effects of market volatilities on Ovation Science and MPX International 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 Ovation Science with a short position of MPX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ovation Science and MPX International.

Diversification Opportunities for Ovation Science and MPX International

-0.18

Correlation Coefficient

Ovation Science  MPX International

Good diversification

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

Pair Corralation between Ovation Science and MPX International

Assuming the 90 days horizon Ovation Science is expected to generate 3.53 times less return on investment than MPX International. But when comparing it to its historical volatility, Ovation Science is 4.24 times less risky than MPX International. It trades about 0.16 of its potential returns per unit of risk. MPX International Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  0.11  in MPX International Corp on December 20, 2024 and sell it today you would lose (0.10) from holding MPX International Corp or give up 90.91% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.83%
Values	Daily Returns

Ovation Science  vs.  MPX International Corp

Ovation Science

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ovation Science are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Ovation Science reported solid returns over the last few months and may actually be approaching a breakup point.

MPX International Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MPX International Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MPX International reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ovation Science and MPX International

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

The idea behind Ovation Science and MPX International Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.