Correlation Between Wearable Devices and MICS Old

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

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

Diversification Opportunities for Wearable Devices and MICS Old

0.24

Correlation Coefficient

Wearable Devices  MICS Old

Modest diversification

The 3 months correlation between Wearable and MICS is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Wearable Devices and MICS Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICS Old and Wearable Devices 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 Wearable Devices are associated (or correlated) with MICS Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICS Old has no effect on the direction of Wearable Devices i.e., Wearable Devices and MICS Old go up and down completely randomly.

Pair Corralation between Wearable Devices and MICS Old

Given the investment horizon of 90 days Wearable Devices is expected to generate 1.66 times more return on investment than MICS Old. However, Wearable Devices is 1.66 times more volatile than MICS Old. It trades about 0.02 of its potential returns per unit of risk. MICS Old is currently generating about -0.03 per unit of risk. If you would invest  1,050  in Wearable Devices on October 10, 2024 and sell it today you would lose (847.00) from holding Wearable Devices or give up 80.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.32%
Values	Daily Returns

Wearable Devices  vs.  MICS Old

Wearable Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wearable Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

MICS Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MICS Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Wearable Devices and MICS Old

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

The idea behind Wearable Devices and MICS Old 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.