Correlation Between AGRICUL BK and Mastercard
Can any of the company-specific risk be diversified away by investing in both AGRICUL BK and Mastercard 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 AGRICUL BK and Mastercard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGRICUL BK CHINA H and Mastercard, you can compare the effects of market volatilities on AGRICUL BK and Mastercard 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 AGRICUL BK with a short position of Mastercard. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGRICUL BK and Mastercard.
Diversification Opportunities for AGRICUL BK and Mastercard
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AGRICUL and Mastercard is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding AGRICUL BK CHINA H and Mastercard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastercard and AGRICUL BK 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 AGRICUL BK CHINA H are associated (or correlated) with Mastercard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastercard has no effect on the direction of AGRICUL BK i.e., AGRICUL BK and Mastercard go up and down completely randomly.
Pair Corralation between AGRICUL BK and Mastercard
Assuming the 90 days trading horizon AGRICUL BK is expected to generate 1.22 times less return on investment than Mastercard. In addition to that, AGRICUL BK is 2.21 times more volatile than Mastercard. It trades about 0.08 of its total potential returns per unit of risk. Mastercard is currently generating about 0.22 per unit of volatility. If you would invest 42,468 in Mastercard on August 28, 2024 and sell it today you would earn a total of 7,412 from holding Mastercard or generate 17.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGRICUL BK CHINA H vs. Mastercard
Performance |
| Timeline |
| AGRICUL BK CHINA |
| Mastercard |
AGRICUL BK and Mastercard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGRICUL BK and Mastercard
The main advantage of trading using opposite AGRICUL BK and Mastercard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGRICUL BK position performs unexpectedly, Mastercard 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 Mastercard will offset losses from the drop in Mastercard's long position.The idea behind AGRICUL BK CHINA H and Mastercard 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.| Mastercard vs. Superior Plus Corp | Mastercard vs. NMI Holdings | Mastercard vs. Origin Agritech | Mastercard vs. SIVERS SEMICONDUCTORS AB |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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