Correlation Between ES Ceramics and MClean Technologies
Can any of the company-specific risk be diversified away by investing in both ES Ceramics and MClean Technologies 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 ES Ceramics and MClean Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ES Ceramics Technology and MClean Technologies Bhd, you can compare the effects of market volatilities on ES Ceramics and MClean Technologies 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 ES Ceramics with a short position of MClean Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and MClean Technologies.
Diversification Opportunities for ES Ceramics and MClean Technologies
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0100 and MClean is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and MClean Technologies Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MClean Technologies Bhd and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with MClean Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MClean Technologies Bhd has no effect on the direction of ES Ceramics i.e., ES Ceramics and MClean Technologies go up and down completely randomly.
Pair Corralation between ES Ceramics and MClean Technologies
Assuming the 90 days trading horizon ES Ceramics Technology is expected to under-perform the MClean Technologies. But the stock apears to be less risky and, when comparing its historical volatility, ES Ceramics Technology is 1.83 times less risky than MClean Technologies. The stock trades about -0.05 of its potential returns per unit of risk. The MClean Technologies Bhd is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 27.00 in MClean Technologies Bhd on August 30, 2024 and sell it today you would lose (3.00) from holding MClean Technologies Bhd or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ES Ceramics Technology vs. MClean Technologies Bhd
Performance |
| Timeline |
| ES Ceramics Technology |
| MClean Technologies Bhd |
ES Ceramics and MClean Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ES Ceramics and MClean Technologies
The main advantage of trading using opposite ES Ceramics and MClean Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ES Ceramics position performs unexpectedly, MClean Technologies 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 MClean Technologies will offset losses from the drop in MClean Technologies' long position.| ES Ceramics vs. Mycron Steel Bhd | ES Ceramics vs. CSC Steel Holdings | ES Ceramics vs. Uchi Technologies Bhd | ES Ceramics vs. Radiant Globaltech Bhd |
| MClean Technologies vs. Uchi Technologies Bhd | MClean Technologies vs. Greatech Technology Bhd | MClean Technologies vs. K One Technology Bhd | MClean Technologies vs. PMB Technology Bhd |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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