Correlation Between Mangels Industrial and Basic Materials
Can any of the company-specific risk be diversified away by investing in both Mangels Industrial and Basic Materials 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 Mangels Industrial and Basic Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mangels Industrial SA and Basic Materials, you can compare the effects of market volatilities on Mangels Industrial and Basic Materials 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 Mangels Industrial with a short position of Basic Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mangels Industrial and Basic Materials.
Diversification Opportunities for Mangels Industrial and Basic Materials
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mangels and Basic is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Mangels Industrial SA and Basic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Basic Materials and Mangels Industrial 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 Mangels Industrial SA are associated (or correlated) with Basic Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Basic Materials has no effect on the direction of Mangels Industrial i.e., Mangels Industrial and Basic Materials go up and down completely randomly.
Pair Corralation between Mangels Industrial and Basic Materials
Assuming the 90 days trading horizon Mangels Industrial SA is expected to under-perform the Basic Materials. In addition to that, Mangels Industrial is 2.96 times more volatile than Basic Materials. It trades about -0.01 of its total potential returns per unit of risk. Basic Materials is currently generating about -0.01 per unit of volatility. If you would invest 591,457 in Basic Materials on October 30, 2024 and sell it today you would lose (42,721) from holding Basic Materials or give up 7.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.99% |
| Values | Daily Returns |
Mangels Industrial SA vs. Basic Materials
Performance |
| Timeline |
Mangels Industrial and Basic Materials Volatility Contrast
Predicted Return Density |
| Returns |
Mangels Industrial SA
Pair trading matchups for Mangels Industrial
Basic Materials
Pair trading matchups for Basic Materials
Pair Trading with Mangels Industrial and Basic Materials
The main advantage of trading using opposite Mangels Industrial and Basic Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mangels Industrial position performs unexpectedly, Basic Materials 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 Basic Materials will offset losses from the drop in Basic Materials' long position.| Mangels Industrial vs. Inepar SA Indstria | Mangels Industrial vs. Lupatech SA | Mangels Industrial vs. Paranapanema SA | Mangels Industrial vs. Plascar Participaes Industriais |
| Basic Materials vs. New Oriental Education | Basic Materials vs. Microchip Technology Incorporated | Basic Materials vs. MAHLE Metal Leve | Basic Materials vs. TAL Education Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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