Correlation Between Solution Advanced and MPLUS Corp
Can any of the company-specific risk be diversified away by investing in both Solution Advanced 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 Solution Advanced and MPLUS Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and mPLUS Corp, you can compare the effects of market volatilities on Solution Advanced 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 Solution Advanced with a short position of MPLUS Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and MPLUS Corp.
Diversification Opportunities for Solution Advanced and MPLUS Corp
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and MPLUS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and mPLUS Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mPLUS Corp and Solution Advanced 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 Solution Advanced Technology 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 Solution Advanced i.e., Solution Advanced and MPLUS Corp go up and down completely randomly.
Pair Corralation between Solution Advanced and MPLUS Corp
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the MPLUS Corp. But the stock apears to be less risky and, when comparing its historical volatility, Solution Advanced Technology is 1.13 times less risky than MPLUS Corp. The stock trades about 0.0 of its potential returns per unit of risk. The mPLUS Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 743,000 in mPLUS Corp on September 18, 2024 and sell it today you would earn a total of 63,000 from holding mPLUS Corp or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Solution Advanced Technology vs. mPLUS Corp
Performance |
| Timeline |
| Solution Advanced |
| mPLUS Corp |
Solution Advanced and MPLUS Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and MPLUS Corp
The main advantage of trading using opposite Solution Advanced and MPLUS Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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