Correlation Between Global Health and MFF Capital
Can any of the company-specific risk be diversified away by investing in both Global Health and MFF Capital 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 Global Health and MFF Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and MFF Capital Investments, you can compare the effects of market volatilities on Global Health and MFF Capital 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 Global Health with a short position of MFF Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and MFF Capital.
Diversification Opportunities for Global Health and MFF Capital
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Global and MFF is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and MFF Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFF Capital Investments and Global Health 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 Global Health are associated (or correlated) with MFF Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFF Capital Investments has no effect on the direction of Global Health i.e., Global Health and MFF Capital go up and down completely randomly.
Pair Corralation between Global Health and MFF Capital
Assuming the 90 days trading horizon Global Health is expected to generate 3.46 times more return on investment than MFF Capital. However, Global Health is 3.46 times more volatile than MFF Capital Investments. It trades about 0.08 of its potential returns per unit of risk. MFF Capital Investments is currently generating about 0.18 per unit of risk. If you would invest 12.00 in Global Health on September 4, 2024 and sell it today you would earn a total of 2.00 from holding Global Health or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. MFF Capital Investments
Performance |
| Timeline |
| Global Health |
| MFF Capital Investments |
Global Health and MFF Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and MFF Capital
The main advantage of trading using opposite Global Health and MFF Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health position performs unexpectedly, MFF Capital 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 MFF Capital will offset losses from the drop in MFF Capital's long position.| Global Health vs. Aneka Tambang Tbk | Global Health vs. BHP Group Limited | Global Health vs. Commonwealth Bank of | Global Health vs. Commonwealth Bank of |
| MFF Capital vs. Global Health | MFF Capital vs. Healthco Healthcare and | MFF Capital vs. Beston Global Food | MFF Capital vs. BTC Health Limited |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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