Correlation Between Sandon Capital and MFF Capital

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

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

Diversification Opportunities for Sandon Capital and MFF Capital

-0.32

Correlation Coefficient

Sandon Capital  MFF Capital

Very good diversification

The 3 months correlation between Sandon and MFF is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Sandon Capital Investments and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and Sandon Capital 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 Sandon Capital Investments are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of Sandon Capital i.e., Sandon Capital and MFF Capital go up and down completely randomly.

Pair Corralation between Sandon Capital and MFF Capital

Assuming the 90 days trading horizon Sandon Capital is expected to generate 2.82 times less return on investment than MFF Capital. In addition to that, Sandon Capital is 1.65 times more volatile than MFF Capital Investments. It trades about 0.04 of its total potential returns per unit of risk. MFF Capital Investments is currently generating about 0.16 per unit of volatility. If you would invest  300.00  in MFF Capital Investments on October 8, 2024 and sell it today you would earn a total of  169.00  from holding MFF Capital Investments or generate 56.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.8%
Values	Daily Returns

Sandon Capital Investments  vs.  MFF Capital Investments

Sandon Capital Inves

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sandon Capital Investments are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Sandon Capital is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MFF Capital Investments

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MFF Capital Investments are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, MFF Capital unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sandon Capital and MFF Capital

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

The idea behind Sandon Capital Investments and MFF Capital Investments 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.