Correlation Between SOFTWARE MANSION and MLP Group

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

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

Diversification Opportunities for SOFTWARE MANSION and MLP Group

0.2

Correlation Coefficient

SOFTWARE MANSION  MLP Group

Modest diversification

The 3 months correlation between SOFTWARE and MLP is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding SOFTWARE MANSION SPOLKA and MLP Group SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MLP Group SA and SOFTWARE MANSION 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 SOFTWARE MANSION SPOLKA are associated (or correlated) with MLP Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MLP Group SA has no effect on the direction of SOFTWARE MANSION i.e., SOFTWARE MANSION and MLP Group go up and down completely randomly.

Pair Corralation between SOFTWARE MANSION and MLP Group

Assuming the 90 days trading horizon SOFTWARE MANSION SPOLKA is expected to under-perform the MLP Group. But the stock apears to be less risky and, when comparing its historical volatility, SOFTWARE MANSION SPOLKA is 1.25 times less risky than MLP Group. The stock trades about -0.03 of its potential returns per unit of risk. The MLP Group SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  8,200  in MLP Group SA on September 15, 2024 and sell it today you would earn a total of  40.00  from holding MLP Group SA or generate 0.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	93.65%
Values	Daily Returns

SOFTWARE MANSION SPOLKA  vs.  MLP Group SA

SOFTWARE MANSION SPOLKA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOFTWARE MANSION SPOLKA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, SOFTWARE MANSION is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

MLP Group SA

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MLP Group SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, MLP Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with SOFTWARE MANSION and MLP Group

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

The idea behind SOFTWARE MANSION SPOLKA and MLP Group 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.