Correlation Between TFS FINANCIAL and MBANK

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

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

Diversification Opportunities for TFS FINANCIAL and MBANK

-0.72

Correlation Coefficient

TFS FINANCIAL  MBANK

Pay attention - limited upside

The 3 months correlation between TFS and MBANK is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK and TFS FINANCIAL 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 TFS FINANCIAL are associated (or correlated) with MBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK has no effect on the direction of TFS FINANCIAL i.e., TFS FINANCIAL and MBANK go up and down completely randomly.

Pair Corralation between TFS FINANCIAL and MBANK

Assuming the 90 days trading horizon TFS FINANCIAL is expected to under-perform the MBANK. But the stock apears to be less risky and, when comparing its historical volatility, TFS FINANCIAL is 1.76 times less risky than MBANK. The stock trades about -0.45 of its potential returns per unit of risk. The MBANK is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12,095  in MBANK on September 27, 2024 and sell it today you would earn a total of  315.00  from holding MBANK or generate 2.6% return on investment over 90 days.

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

TFS FINANCIAL  vs.  MBANK

TFS FINANCIAL

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in TFS FINANCIAL are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, TFS FINANCIAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with TFS FINANCIAL and MBANK

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

The idea behind TFS FINANCIAL and MBANK 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 Global Correlations module to find global opportunities by holding instruments from different markets.