Correlation Between MFEC PCL and Modernform Group
Can any of the company-specific risk be diversified away by investing in both MFEC PCL and Modernform Group 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 MFEC PCL and Modernform Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFEC PCL and Modernform Group Public, you can compare the effects of market volatilities on MFEC PCL and Modernform Group 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 MFEC PCL with a short position of Modernform Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFEC PCL and Modernform Group.
Diversification Opportunities for MFEC PCL and Modernform Group
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between MFEC and Modernform is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding MFEC PCL and Modernform Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Modernform Group Public and MFEC PCL 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 MFEC PCL are associated (or correlated) with Modernform Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Modernform Group Public has no effect on the direction of MFEC PCL i.e., MFEC PCL and Modernform Group go up and down completely randomly.
Pair Corralation between MFEC PCL and Modernform Group
Assuming the 90 days trading horizon MFEC PCL is expected to generate 0.59 times more return on investment than Modernform Group. However, MFEC PCL is 1.69 times less risky than Modernform Group. It trades about 0.11 of its potential returns per unit of risk. Modernform Group Public is currently generating about -0.16 per unit of risk. If you would invest 615.00 in MFEC PCL on September 3, 2024 and sell it today you would earn a total of 15.00 from holding MFEC PCL or generate 2.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFEC PCL vs. Modernform Group Public
Performance |
| Timeline |
| MFEC PCL |
| Modernform Group Public |
MFEC PCL and Modernform Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFEC PCL and Modernform Group
The main advantage of trading using opposite MFEC PCL and Modernform Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFEC PCL position performs unexpectedly, Modernform Group 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 Modernform Group will offset losses from the drop in Modernform Group's long position.| MFEC PCL vs. Internet Thailand Public | MFEC PCL vs. Advanced Information Technology | MFEC PCL vs. Metro Systems | MFEC PCL vs. Jasmine International Public |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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