Correlation Between Magni Tech and Tomei Consolidated
Can any of the company-specific risk be diversified away by investing in both Magni Tech and Tomei Consolidated 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 Magni Tech and Tomei Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magni Tech Industries and Tomei Consolidated Bhd, you can compare the effects of market volatilities on Magni Tech and Tomei Consolidated 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 Magni Tech with a short position of Tomei Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magni Tech and Tomei Consolidated.
Diversification Opportunities for Magni Tech and Tomei Consolidated
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magni and Tomei is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Magni Tech Industries and Tomei Consolidated Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomei Consolidated Bhd and Magni Tech 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 Magni Tech Industries are associated (or correlated) with Tomei Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomei Consolidated Bhd has no effect on the direction of Magni Tech i.e., Magni Tech and Tomei Consolidated go up and down completely randomly.
Pair Corralation between Magni Tech and Tomei Consolidated
Assuming the 90 days trading horizon Magni Tech Industries is expected to under-perform the Tomei Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Magni Tech Industries is 2.26 times less risky than Tomei Consolidated. The stock trades about -0.22 of its potential returns per unit of risk. The Tomei Consolidated Bhd is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 152.00 in Tomei Consolidated Bhd on November 28, 2024 and sell it today you would earn a total of 25.00 from holding Tomei Consolidated Bhd or generate 16.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magni Tech Industries vs. Tomei Consolidated Bhd
Performance |
| Timeline |
| Magni Tech Industries |
| Tomei Consolidated Bhd |
Magni Tech and Tomei Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magni Tech and Tomei Consolidated
The main advantage of trading using opposite Magni Tech and Tomei Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magni Tech position performs unexpectedly, Tomei Consolidated 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 Tomei Consolidated will offset losses from the drop in Tomei Consolidated's long position.The idea behind Magni Tech Industries and Tomei Consolidated Bhd 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.| Tomei Consolidated vs. Leader Steel Holdings | Tomei Consolidated vs. RHB Bank Bhd | Tomei Consolidated vs. Sungei Bagan Rubber | Tomei Consolidated vs. Sports Toto Berhad |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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