Correlation Between MRF and Computer Age
Can any of the company-specific risk be diversified away by investing in both MRF and Computer Age 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 MRF and Computer Age into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRF Limited and Computer Age Management, you can compare the effects of market volatilities on MRF and Computer Age 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 MRF with a short position of Computer Age. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRF and Computer Age.
Diversification Opportunities for MRF and Computer Age
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between MRF and Computer is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding MRF Limited and Computer Age Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Age Management and MRF 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 MRF Limited are associated (or correlated) with Computer Age. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Age Management has no effect on the direction of MRF i.e., MRF and Computer Age go up and down completely randomly.
Pair Corralation between MRF and Computer Age
Assuming the 90 days trading horizon MRF Limited is expected to generate 0.32 times more return on investment than Computer Age. However, MRF Limited is 3.15 times less risky than Computer Age. It trades about -0.34 of its potential returns per unit of risk. Computer Age Management is currently generating about -0.4 per unit of risk. If you would invest 12,287,000 in MRF Limited on November 5, 2024 and sell it today you would lose (923,700) from holding MRF Limited or give up 7.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
MRF Limited vs. Computer Age Management
Performance |
| Timeline |
| MRF Limited |
| Computer Age Management |
MRF and Computer Age Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRF and Computer Age
The main advantage of trading using opposite MRF and Computer Age positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRF position performs unexpectedly, Computer Age 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 Computer Age will offset losses from the drop in Computer Age's long position.| MRF vs. Silver Touch Technologies | MRF vs. Vibhor Steel Tubes | MRF vs. Som Distilleries Breweries | MRF vs. Transport of |
| Computer Age vs. The State Trading | Computer Age vs. Zenith Steel Pipes | Computer Age vs. Industrial Investment Trust | Computer Age vs. Kalyani Investment |
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.
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