Correlation Between Microfriend and Eugene Investment
Can any of the company-specific risk be diversified away by investing in both Microfriend and Eugene Investment 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 Microfriend and Eugene Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microfriend and Eugene Investment Securities, you can compare the effects of market volatilities on Microfriend and Eugene Investment 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 Microfriend with a short position of Eugene Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microfriend and Eugene Investment.
Diversification Opportunities for Microfriend and Eugene Investment
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Microfriend and Eugene is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Microfriend and Eugene Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eugene Investment and Microfriend 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 Microfriend are associated (or correlated) with Eugene Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eugene Investment has no effect on the direction of Microfriend i.e., Microfriend and Eugene Investment go up and down completely randomly.
Pair Corralation between Microfriend and Eugene Investment
Assuming the 90 days trading horizon Microfriend is expected to generate 1.35 times more return on investment than Eugene Investment. However, Microfriend is 1.35 times more volatile than Eugene Investment Securities. It trades about 0.04 of its potential returns per unit of risk. Eugene Investment Securities is currently generating about -0.13 per unit of risk. If you would invest 284,000 in Microfriend on October 23, 2024 and sell it today you would earn a total of 4,000 from holding Microfriend or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microfriend vs. Eugene Investment Securities
Performance |
| Timeline |
| Microfriend |
| Eugene Investment |
Microfriend and Eugene Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microfriend and Eugene Investment
The main advantage of trading using opposite Microfriend and Eugene Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microfriend position performs unexpectedly, Eugene Investment 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 Eugene Investment will offset losses from the drop in Eugene Investment's long position.| Microfriend vs. LG Household Healthcare | Microfriend vs. Polaris Office Corp | Microfriend vs. Hanjoo Light Metal | Microfriend vs. Sempio Foods Co |
| Eugene Investment vs. AptaBio Therapeutics | Eugene Investment vs. Daewoo SBI SPAC | Eugene Investment vs. Dream Security co | Eugene Investment vs. Microfriend |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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