Correlation Between MFC Industrial and President Automobile
Can any of the company-specific risk be diversified away by investing in both MFC Industrial and President Automobile 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 MFC Industrial and President Automobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFC Industrial Investment and President Automobile Industries, you can compare the effects of market volatilities on MFC Industrial and President Automobile 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 MFC Industrial with a short position of President Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFC Industrial and President Automobile.
Diversification Opportunities for MFC Industrial and President Automobile
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MFC and President is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding MFC Industrial Investment and President Automobile Industrie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Automobile and MFC Industrial 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 MFC Industrial Investment are associated (or correlated) with President Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Automobile has no effect on the direction of MFC Industrial i.e., MFC Industrial and President Automobile go up and down completely randomly.
Pair Corralation between MFC Industrial and President Automobile
Assuming the 90 days trading horizon MFC Industrial Investment is expected to generate 0.71 times more return on investment than President Automobile. However, MFC Industrial Investment is 1.41 times less risky than President Automobile. It trades about 0.22 of its potential returns per unit of risk. President Automobile Industries is currently generating about -0.13 per unit of risk. If you would invest 557.00 in MFC Industrial Investment on September 2, 2024 and sell it today you would earn a total of 78.00 from holding MFC Industrial Investment or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFC Industrial Investment vs. President Automobile Industrie
Performance |
| Timeline |
| MFC Industrial Investment |
| President Automobile |
MFC Industrial and President Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFC Industrial and President Automobile
The main advantage of trading using opposite MFC Industrial and President Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFC Industrial position performs unexpectedly, President Automobile 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 President Automobile will offset losses from the drop in President Automobile's long position.| MFC Industrial vs. MFC Nichada Thani Property | MFC Industrial vs. LH Shopping Centers | MFC Industrial vs. MFC Strategic Storage | MFC Industrial vs. HEMARAJ INDUSTRIAL PROPERTY |
| President Automobile vs. Phol Dhanya Public | President Automobile vs. PTT Oil and | President Automobile vs. Pico Public | President Automobile vs. Pioneer Motor Public |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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