Correlation Between ON SEMICONDUCTOR and MBANK

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

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

Diversification Opportunities for ON SEMICONDUCTOR and MBANK

-0.24

Correlation Coefficient

ON SEMICONDUCTOR  MBANK

Very good diversification

The 3 months correlation between XS4 and MBANK is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding ON SEMICONDUCTOR and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK and ON SEMICONDUCTOR 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 ON SEMICONDUCTOR are associated (or correlated) with MBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK has no effect on the direction of ON SEMICONDUCTOR i.e., ON SEMICONDUCTOR and MBANK go up and down completely randomly.

Pair Corralation between ON SEMICONDUCTOR and MBANK

Assuming the 90 days trading horizon ON SEMICONDUCTOR is expected to under-perform the MBANK. In addition to that, ON SEMICONDUCTOR is 1.02 times more volatile than MBANK. It trades about -0.04 of its total potential returns per unit of risk. MBANK is currently generating about -0.01 per unit of volatility. If you would invest  12,730  in MBANK on September 27, 2024 and sell it today you would lose (320.00) from holding MBANK or give up 2.51% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ON SEMICONDUCTOR  vs.  MBANK

ON SEMICONDUCTOR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ON SEMICONDUCTOR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ON SEMICONDUCTOR is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

MBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with ON SEMICONDUCTOR and MBANK

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

The idea behind ON SEMICONDUCTOR and MBANK 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..