Correlation Between Morgan Stanley and Southern Petrochemicals
Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Southern Petrochemicals 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 Morgan Stanley and Southern Petrochemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Morgan Stanley Direct and Southern Petrochemicals Industries, you can compare the effects of market volatilities on Morgan Stanley and Southern Petrochemicals 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 Morgan Stanley with a short position of Southern Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Southern Petrochemicals.
Diversification Opportunities for Morgan Stanley and Southern Petrochemicals
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Morgan and Southern is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Petrochemicals and Morgan Stanley 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 Morgan Stanley Direct are associated (or correlated) with Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Southern Petrochemicals go up and down completely randomly.
Pair Corralation between Morgan Stanley and Southern Petrochemicals
Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.47 times more return on investment than Southern Petrochemicals. However, Morgan Stanley Direct is 2.12 times less risky than Southern Petrochemicals. It trades about 0.05 of its potential returns per unit of risk. Southern Petrochemicals Industries is currently generating about -0.02 per unit of risk. If you would invest 1,971 in Morgan Stanley Direct on September 21, 2024 and sell it today you would earn a total of 93.00 from holding Morgan Stanley Direct or generate 4.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.06% |
| Values | Daily Returns |
Morgan Stanley Direct vs. Southern Petrochemicals Indust
Performance |
| Timeline |
| Morgan Stanley Direct |
| Southern Petrochemicals |
Morgan Stanley and Southern Petrochemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Morgan Stanley and Southern Petrochemicals
The main advantage of trading using opposite Morgan Stanley and Southern Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Morgan Stanley position performs unexpectedly, Southern Petrochemicals 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 Southern Petrochemicals will offset losses from the drop in Southern Petrochemicals' long position.| Morgan Stanley vs. Sabre Corpo | Morgan Stanley vs. SFL Corporation | Morgan Stanley vs. National CineMedia | Morgan Stanley vs. Marchex |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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