Correlation Between MCB GROUP and ABC BANKING
Can any of the company-specific risk be diversified away by investing in both MCB GROUP and ABC BANKING 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 MCB GROUP and ABC BANKING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MCB GROUP LIMITED and ABC BANKING PORATION, you can compare the effects of market volatilities on MCB GROUP and ABC BANKING 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 MCB GROUP with a short position of ABC BANKING. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB GROUP and ABC BANKING.
Diversification Opportunities for MCB GROUP and ABC BANKING
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MCB and ABC is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding MCB GROUP LIMITED and ABC BANKING PORATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABC BANKING PORATION and MCB GROUP 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 MCB GROUP LIMITED are associated (or correlated) with ABC BANKING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABC BANKING PORATION has no effect on the direction of MCB GROUP i.e., MCB GROUP and ABC BANKING go up and down completely randomly.
Pair Corralation between MCB GROUP and ABC BANKING
Assuming the 90 days trading horizon MCB GROUP LIMITED is expected to generate 0.56 times more return on investment than ABC BANKING. However, MCB GROUP LIMITED is 1.79 times less risky than ABC BANKING. It trades about 0.16 of its potential returns per unit of risk. ABC BANKING PORATION is currently generating about 0.04 per unit of risk. If you would invest 32,600 in MCB GROUP LIMITED on September 4, 2024 and sell it today you would earn a total of 11,450 from holding MCB GROUP LIMITED or generate 35.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.02% |
| Values | Daily Returns |
MCB GROUP LIMITED vs. ABC BANKING PORATION
Performance |
| Timeline |
| MCB GROUP LIMITED |
| ABC BANKING PORATION |
MCB GROUP and ABC BANKING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MCB GROUP and ABC BANKING
The main advantage of trading using opposite MCB GROUP and ABC BANKING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MCB GROUP position performs unexpectedly, ABC BANKING 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 ABC BANKING will offset losses from the drop in ABC BANKING's long position.| MCB GROUP vs. FINCORP INVESTMENT LTD | MCB GROUP vs. MUA LTD | MCB GROUP vs. LOTTOTECH LTD | MCB GROUP vs. LUX ISLAND RESORTS |
| ABC BANKING vs. FINCORP INVESTMENT LTD | ABC BANKING vs. MCB GROUP LIMITED | ABC BANKING vs. MUA LTD | ABC BANKING vs. LOTTOTECH LTD |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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