Correlation Between Morgan Co and CAFCA

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Can any of the company-specific risk be diversified away by investing in both Morgan Co and CAFCA 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 Morgan Co and CAFCA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Co Multi and CAFCA LIMITED, you can compare the effects of market volatilities on Morgan Co and CAFCA 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 Morgan Co with a short position of CAFCA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Co and CAFCA.

Diversification Opportunities for Morgan Co and CAFCA

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Morgan and CAFCA is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Co Multi and CAFCA LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAFCA LIMITED and Morgan Co 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 Morgan Co Multi are associated (or correlated) with CAFCA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAFCA LIMITED has no effect on the direction of Morgan Co i.e., Morgan Co and CAFCA go up and down completely randomly.

Pair Corralation between Morgan Co and CAFCA

Assuming the 90 days trading horizon Morgan Co Multi is expected to generate 1.86 times more return on investment than CAFCA. However, Morgan Co is 1.86 times more volatile than CAFCA LIMITED. It trades about 0.46 of its potential returns per unit of risk. CAFCA LIMITED is currently generating about 0.18 per unit of risk. If you would invest  4,500  in Morgan Co Multi on August 30, 2024 and sell it today you would earn a total of  16,600  from holding Morgan Co Multi or generate 368.89% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Morgan Co Multi  vs.  CAFCA LIMITED

 Performance 
       Timeline  
Morgan Co Multi 

Risk-Adjusted Performance

36 of 100

 
Weak
 
Strong
Very Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Co Multi are ranked lower than 36 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent primary indicators, Morgan Co showed solid returns over the last few months and may actually be approaching a breakup point.
CAFCA LIMITED 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in CAFCA LIMITED are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, CAFCA showed solid returns over the last few months and may actually be approaching a breakup point.

Morgan Co and CAFCA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Morgan Co and CAFCA

The main advantage of trading using opposite Morgan Co and CAFCA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Co position performs unexpectedly, CAFCA 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 CAFCA will offset losses from the drop in CAFCA's long position.
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The idea behind Morgan Co Multi and CAFCA 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.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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