Correlation Between PCF Group and Monnari Trade

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

By analyzing existing cross correlation between PCF Group SA and Monnari Trade SA, you can compare the effects of market volatilities on PCF Group and Monnari Trade 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 PCF Group with a short position of Monnari Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of PCF Group and Monnari Trade.

Diversification Opportunities for PCF Group and Monnari Trade

0.9

Correlation Coefficient

PCF Group  Monnari Trade

Almost no diversification

The 3 months correlation between PCF and Monnari is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding PCF Group SA and Monnari Trade SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monnari Trade SA and PCF Group 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 PCF Group SA are associated (or correlated) with Monnari Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monnari Trade SA has no effect on the direction of PCF Group i.e., PCF Group and Monnari Trade go up and down completely randomly.

Pair Corralation between PCF Group and Monnari Trade

Assuming the 90 days trading horizon PCF Group SA is expected to under-perform the Monnari Trade. In addition to that, PCF Group is 2.34 times more volatile than Monnari Trade SA. It trades about -0.18 of its total potential returns per unit of risk. Monnari Trade SA is currently generating about -0.16 per unit of volatility. If you would invest  580.00  in Monnari Trade SA on October 26, 2024 and sell it today you would lose (90.00) from holding Monnari Trade SA or give up 15.52% of portfolio value over 90 days.

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

PCF Group SA  vs.  Monnari Trade SA

PCF Group SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PCF Group SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Monnari Trade SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monnari Trade SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with PCF Group and Monnari Trade

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

The idea behind PCF Group SA and Monnari Trade SA 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.