Correlation Between RS Automation and MPLUS Corp
Can any of the company-specific risk be diversified away by investing in both RS Automation and MPLUS Corp 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 RS Automation and MPLUS Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RS Automation CoLtd and mPLUS Corp, you can compare the effects of market volatilities on RS Automation and MPLUS Corp 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 RS Automation with a short position of MPLUS Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of RS Automation and MPLUS Corp.
Diversification Opportunities for RS Automation and MPLUS Corp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 140670 and MPLUS is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding RS Automation CoLtd and mPLUS Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mPLUS Corp and RS Automation 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 RS Automation CoLtd are associated (or correlated) with MPLUS Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mPLUS Corp has no effect on the direction of RS Automation i.e., RS Automation and MPLUS Corp go up and down completely randomly.
Pair Corralation between RS Automation and MPLUS Corp
Assuming the 90 days trading horizon RS Automation CoLtd is expected to generate 1.28 times more return on investment than MPLUS Corp. However, RS Automation is 1.28 times more volatile than mPLUS Corp. It trades about 0.13 of its potential returns per unit of risk. mPLUS Corp is currently generating about -0.39 per unit of risk. If you would invest 1,055,000 in RS Automation CoLtd on August 29, 2024 and sell it today you would earn a total of 84,000 from holding RS Automation CoLtd or generate 7.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RS Automation CoLtd vs. mPLUS Corp
Performance |
| Timeline |
| RS Automation CoLtd |
| mPLUS Corp |
RS Automation and MPLUS Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RS Automation and MPLUS Corp
The main advantage of trading using opposite RS Automation and MPLUS Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RS Automation position performs unexpectedly, MPLUS Corp 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 MPLUS Corp will offset losses from the drop in MPLUS Corp's long position.| RS Automation vs. Ecopro BM Co | RS Automation vs. Sangsin Energy Display | RS Automation vs. Bosung Power Technology | RS Automation vs. APro Co |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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