Correlation Between EGain and MF International
Can any of the company-specific risk be diversified away by investing in both EGain and MF International 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 EGain and MF International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between eGain and mF International Limited, you can compare the effects of market volatilities on EGain and MF International 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 EGain with a short position of MF International. Check out your portfolio center. Please also check ongoing floating volatility patterns of EGain and MF International.
Diversification Opportunities for EGain and MF International
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EGain and MFI is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding eGain and mF International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mF International and EGain 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 eGain are associated (or correlated) with MF International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mF International has no effect on the direction of EGain i.e., EGain and MF International go up and down completely randomly.
Pair Corralation between EGain and MF International
Given the investment horizon of 90 days eGain is expected to under-perform the MF International. But the stock apears to be less risky and, when comparing its historical volatility, eGain is 2.4 times less risky than MF International. The stock trades about -0.01 of its potential returns per unit of risk. The mF International Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 93.00 in mF International Limited on September 1, 2024 and sell it today you would lose (17.00) from holding mF International Limited or give up 18.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
eGain vs. mF International Limited
Performance |
| Timeline |
| eGain |
| mF International |
EGain and MF International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EGain and MF International
The main advantage of trading using opposite EGain and MF International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EGain position performs unexpectedly, MF International 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 MF International will offset losses from the drop in MF International's long position.The idea behind eGain and mF International Limited 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.| MF International vs. Nexstar Broadcasting Group | MF International vs. Sun Country Airlines | MF International vs. Sandstorm Gold Ltd | MF International vs. Afya |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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