Correlation Between Ecopro BM and MPLUS Corp
Can any of the company-specific risk be diversified away by investing in both Ecopro BM 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 Ecopro BM and MPLUS Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecopro BM Co and mPLUS Corp, you can compare the effects of market volatilities on Ecopro BM 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 Ecopro BM with a short position of MPLUS Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecopro BM and MPLUS Corp.
Diversification Opportunities for Ecopro BM and MPLUS Corp
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecopro and MPLUS is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ecopro BM Co and mPLUS Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mPLUS Corp and Ecopro BM 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 Ecopro BM Co 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 Ecopro BM i.e., Ecopro BM and MPLUS Corp go up and down completely randomly.
Pair Corralation between Ecopro BM and MPLUS Corp
Assuming the 90 days trading horizon Ecopro BM Co is expected to generate 1.68 times more return on investment than MPLUS Corp. However, Ecopro BM is 1.68 times more volatile than mPLUS Corp. It trades about -0.21 of its potential returns per unit of risk. mPLUS Corp is currently generating about -0.39 per unit of risk. If you would invest 17,200,000 in Ecopro BM Co on August 29, 2024 and sell it today you would lose (3,180,000) from holding Ecopro BM Co or give up 18.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecopro BM Co vs. mPLUS Corp
Performance |
| Timeline |
| Ecopro BM |
| mPLUS Corp |
Ecopro BM and MPLUS Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecopro BM and MPLUS Corp
The main advantage of trading using opposite Ecopro BM and MPLUS Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecopro BM 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.The idea behind Ecopro BM Co and mPLUS Corp 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.| MPLUS Corp vs. Korean Reinsurance Co | MPLUS Corp vs. DB Insurance Co | MPLUS Corp vs. Dongbu Insurance Co | MPLUS Corp vs. Hyosung Advanced Materials |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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