Correlation Between MGIC INVESTMENT and China Communications
Can any of the company-specific risk be diversified away by investing in both MGIC INVESTMENT and China Communications 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 MGIC INVESTMENT and China Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MGIC INVESTMENT and China Communications Services, you can compare the effects of market volatilities on MGIC INVESTMENT and China Communications 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 MGIC INVESTMENT with a short position of China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of MGIC INVESTMENT and China Communications.
Diversification Opportunities for MGIC INVESTMENT and China Communications
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MGIC and China is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding MGIC INVESTMENT and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications and MGIC INVESTMENT 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 MGIC INVESTMENT are associated (or correlated) with China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of MGIC INVESTMENT i.e., MGIC INVESTMENT and China Communications go up and down completely randomly.
Pair Corralation between MGIC INVESTMENT and China Communications
Assuming the 90 days trading horizon MGIC INVESTMENT is expected to generate 0.58 times more return on investment than China Communications. However, MGIC INVESTMENT is 1.71 times less risky than China Communications. It trades about 0.18 of its potential returns per unit of risk. China Communications Services is currently generating about 0.03 per unit of risk. If you would invest 2,247 in MGIC INVESTMENT on August 30, 2024 and sell it today you would earn a total of 253.00 from holding MGIC INVESTMENT or generate 11.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MGIC INVESTMENT vs. China Communications Services
Performance |
| Timeline |
| MGIC INVESTMENT |
| China Communications |
MGIC INVESTMENT and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MGIC INVESTMENT and China Communications
The main advantage of trading using opposite MGIC INVESTMENT and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MGIC INVESTMENT position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| MGIC INVESTMENT vs. Lion One Metals | MGIC INVESTMENT vs. Harmony Gold Mining | MGIC INVESTMENT vs. GALENA MINING LTD | MGIC INVESTMENT vs. Perseus Mining Limited |
| China Communications vs. AVITA Medical | China Communications vs. TRADEGATE | China Communications vs. Merit Medical Systems | China Communications vs. SAFETY MEDICAL PROD |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Stocks Directory Find actively traded stocks across global markets | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Transaction History View history of all your transactions and understand their impact on performance |