Correlation Between MRF and Cambridge Technology
Can any of the company-specific risk be diversified away by investing in both MRF and Cambridge Technology 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 Cambridge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MRF Limited and Cambridge Technology Enterprises, you can compare the effects of market volatilities on MRF and Cambridge Technology 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 Cambridge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of MRF and Cambridge Technology.
Diversification Opportunities for MRF and Cambridge Technology
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MRF and Cambridge is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding MRF Limited and Cambridge Technology Enterpris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambridge Technology 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 Cambridge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambridge Technology has no effect on the direction of MRF i.e., MRF and Cambridge Technology go up and down completely randomly.
Pair Corralation between MRF and Cambridge Technology
Assuming the 90 days trading horizon MRF Limited is expected to generate 0.31 times more return on investment than Cambridge Technology. However, MRF Limited is 3.23 times less risky than Cambridge Technology. It trades about -0.73 of its potential returns per unit of risk. Cambridge Technology Enterprises is currently generating about -0.28 per unit of risk. If you would invest 13,114,200 in MRF Limited on October 29, 2024 and sell it today you would lose (1,964,200) from holding MRF Limited or give up 14.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MRF Limited vs. Cambridge Technology Enterpris
Performance |
| Timeline |
| MRF Limited |
| Cambridge Technology |
MRF and Cambridge Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MRF and Cambridge Technology
The main advantage of trading using opposite MRF and Cambridge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MRF position performs unexpectedly, Cambridge Technology 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 Cambridge Technology will offset losses from the drop in Cambridge Technology's long position.| MRF vs. Hindcon Chemicals Limited | MRF vs. Ratnamani Metals Tubes | MRF vs. Rajnandini Metal Limited | MRF vs. Neogen Chemicals Limited |
| Cambridge Technology vs. Nucleus Software Exports | Cambridge Technology vs. Hathway Cable Datacom | Cambridge Technology vs. Hindustan Construction | Cambridge Technology vs. Indraprastha Medical |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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