Correlation Between Megacable Holdings and FibraHotel

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

Diversification Opportunities for Megacable Holdings and FibraHotel

0.01
  Correlation Coefficient

Significant diversification

The 3 months correlation between Megacable and FibraHotel is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Megacable Holdings S and FibraHotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FibraHotel and Megacable Holdings 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 Megacable Holdings S are associated (or correlated) with FibraHotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FibraHotel has no effect on the direction of Megacable Holdings i.e., Megacable Holdings and FibraHotel go up and down completely randomly.

Pair Corralation between Megacable Holdings and FibraHotel

Assuming the 90 days trading horizon Megacable Holdings S is expected to generate 1.12 times more return on investment than FibraHotel. However, Megacable Holdings is 1.12 times more volatile than FibraHotel. It trades about 0.0 of its potential returns per unit of risk. FibraHotel is currently generating about -0.02 per unit of risk. If you would invest  4,104  in Megacable Holdings S on August 29, 2024 and sell it today you would lose (247.00) from holding Megacable Holdings S or give up 6.02% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Megacable Holdings S  vs.  FibraHotel

 Performance 
       Timeline  
Megacable Holdings 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Megacable Holdings S has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
FibraHotel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days FibraHotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical indicators, FibraHotel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Megacable Holdings and FibraHotel Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Megacable Holdings and FibraHotel

The main advantage of trading using opposite Megacable Holdings and FibraHotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megacable Holdings position performs unexpectedly, FibraHotel 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 FibraHotel will offset losses from the drop in FibraHotel's long position.
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The idea behind Megacable Holdings S and FibraHotel 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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