Correlation Between MotorCycle Holdings and Future Generation
Can any of the company-specific risk be diversified away by investing in both MotorCycle Holdings and Future Generation 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 MotorCycle Holdings and Future Generation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MotorCycle Holdings and Future Generation Global, you can compare the effects of market volatilities on MotorCycle Holdings and Future Generation 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 MotorCycle Holdings with a short position of Future Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of MotorCycle Holdings and Future Generation.
Diversification Opportunities for MotorCycle Holdings and Future Generation
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between MotorCycle and Future is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding MotorCycle Holdings and Future Generation Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Generation Global and MotorCycle Holdings 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 MotorCycle Holdings are associated (or correlated) with Future Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Generation Global has no effect on the direction of MotorCycle Holdings i.e., MotorCycle Holdings and Future Generation go up and down completely randomly.
Pair Corralation between MotorCycle Holdings and Future Generation
Assuming the 90 days trading horizon MotorCycle Holdings is expected to generate 2.71 times more return on investment than Future Generation. However, MotorCycle Holdings is 2.71 times more volatile than Future Generation Global. It trades about 0.11 of its potential returns per unit of risk. Future Generation Global is currently generating about 0.14 per unit of risk. If you would invest 160.00 in MotorCycle Holdings on September 12, 2024 and sell it today you would earn a total of 27.00 from holding MotorCycle Holdings or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
MotorCycle Holdings vs. Future Generation Global
Performance |
| Timeline |
| MotorCycle Holdings |
| Future Generation Global |
MotorCycle Holdings and Future Generation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MotorCycle Holdings and Future Generation
The main advantage of trading using opposite MotorCycle Holdings and Future Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MotorCycle Holdings position performs unexpectedly, Future Generation 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 Future Generation will offset losses from the drop in Future Generation's long position.| MotorCycle Holdings vs. Dexus Convenience Retail | MotorCycle Holdings vs. Alto Metals | MotorCycle Holdings vs. Charter Hall Retail | MotorCycle Holdings vs. Black Rock Mining |
| Future Generation vs. Aneka Tambang Tbk | Future Generation vs. Commonwealth Bank | Future Generation vs. BHP Group Limited | Future Generation vs. Rio Tinto |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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