Correlation Between Silly Monks and MRF

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

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

Diversification Opportunities for Silly Monks and MRF

0.21

Correlation Coefficient

Silly Monks  MRF

Modest diversification

The 3 months correlation between Silly and MRF is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Silly Monks Entertainment and MRF Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MRF Limited and Silly Monks 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 Silly Monks Entertainment are associated (or correlated) with MRF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MRF Limited has no effect on the direction of Silly Monks i.e., Silly Monks and MRF go up and down completely randomly.

Pair Corralation between Silly Monks and MRF

Assuming the 90 days trading horizon Silly Monks Entertainment is expected to generate 2.98 times more return on investment than MRF. However, Silly Monks is 2.98 times more volatile than MRF Limited. It trades about 0.07 of its potential returns per unit of risk. MRF Limited is currently generating about -0.06 per unit of risk. If you would invest  2,326  in Silly Monks Entertainment on October 8, 2024 and sell it today you would earn a total of  258.00  from holding Silly Monks Entertainment or generate 11.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Silly Monks Entertainment  vs.  MRF Limited

Silly Monks Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Silly Monks Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Silly Monks displayed solid returns over the last few months and may actually be approaching a breakup point.

MRF Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Silly Monks and MRF

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

The idea behind Silly Monks Entertainment and MRF Limited 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.

Check out your portfolio center.

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.