Correlation Between MPLUS Corp and APro
Can any of the company-specific risk be diversified away by investing in both MPLUS Corp and APro 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 MPLUS Corp and APro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between mPLUS Corp and APro Co, you can compare the effects of market volatilities on MPLUS Corp and APro 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 MPLUS Corp with a short position of APro. Check out your portfolio center. Please also check ongoing floating volatility patterns of MPLUS Corp and APro.
Diversification Opportunities for MPLUS Corp and APro
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MPLUS and APro is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding mPLUS Corp and APro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APro and MPLUS Corp 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 mPLUS Corp are associated (or correlated) with APro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APro has no effect on the direction of MPLUS Corp i.e., MPLUS Corp and APro go up and down completely randomly.
Pair Corralation between MPLUS Corp and APro
Assuming the 90 days trading horizon mPLUS Corp is expected to under-perform the APro. But the stock apears to be less risky and, when comparing its historical volatility, mPLUS Corp is 1.16 times less risky than APro. The stock trades about -0.39 of its potential returns per unit of risk. The APro Co is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest 714,000 in APro Co on August 29, 2024 and sell it today you would lose (113,000) from holding APro Co or give up 15.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
mPLUS Corp vs. APro Co
Performance |
| Timeline |
| mPLUS Corp |
| APro |
MPLUS Corp and APro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MPLUS Corp and APro
The main advantage of trading using opposite MPLUS Corp and APro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MPLUS Corp position performs unexpectedly, APro 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 APro will offset losses from the drop in APro's long position.| 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 CEOs Directory module to screen CEOs from public companies around the world.
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