Correlation Between M Split and Chemtrade Logistics

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

By analyzing existing cross correlation between M Split Corp and Chemtrade Logistics Income, you can compare the effects of market volatilities on M Split and Chemtrade Logistics 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 M Split with a short position of Chemtrade Logistics. Check out your portfolio center. Please also check ongoing floating volatility patterns of M Split and Chemtrade Logistics.

Diversification Opportunities for M Split and Chemtrade Logistics

0.29

Correlation Coefficient

M Split  Chemtrade Logistics

Modest diversification

The 3 months correlation between XMF-PB and Chemtrade is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding M Split Corp and Chemtrade Logistics Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemtrade Logistics and M Split 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 M Split Corp are associated (or correlated) with Chemtrade Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemtrade Logistics has no effect on the direction of M Split i.e., M Split and Chemtrade Logistics go up and down completely randomly.

Pair Corralation between M Split and Chemtrade Logistics

Assuming the 90 days trading horizon M Split Corp is expected to generate 0.38 times more return on investment than Chemtrade Logistics. However, M Split Corp is 2.63 times less risky than Chemtrade Logistics. It trades about 0.08 of its potential returns per unit of risk. Chemtrade Logistics Income is currently generating about -0.32 per unit of risk. If you would invest  517.00  in M Split Corp on October 3, 2024 and sell it today you would earn a total of  4.00  from holding M Split Corp or generate 0.77% return on investment over 90 days.

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

M Split Corp  vs.  Chemtrade Logistics Income

M Split Corp

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in M Split Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, M Split is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Chemtrade Logistics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chemtrade Logistics Income has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Chemtrade Logistics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with M Split and Chemtrade Logistics

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

The idea behind M Split Corp and Chemtrade Logistics Income 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 CEOs Directory module to screen CEOs from public companies around the world.