Correlation Between MUA and PHOENIX BEVERAGES
Can any of the company-specific risk be diversified away by investing in both MUA and PHOENIX BEVERAGES 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 MUA and PHOENIX BEVERAGES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MUA LTD and PHOENIX BEVERAGES LTD, you can compare the effects of market volatilities on MUA and PHOENIX BEVERAGES 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 MUA with a short position of PHOENIX BEVERAGES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MUA and PHOENIX BEVERAGES.
Diversification Opportunities for MUA and PHOENIX BEVERAGES
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between MUA and PHOENIX is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding MUA LTD and PHOENIX BEVERAGES LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PHOENIX BEVERAGES LTD and MUA 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 MUA LTD are associated (or correlated) with PHOENIX BEVERAGES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PHOENIX BEVERAGES LTD has no effect on the direction of MUA i.e., MUA and PHOENIX BEVERAGES go up and down completely randomly.
Pair Corralation between MUA and PHOENIX BEVERAGES
Assuming the 90 days trading horizon MUA LTD is expected to generate 5.6 times more return on investment than PHOENIX BEVERAGES. However, MUA is 5.6 times more volatile than PHOENIX BEVERAGES LTD. It trades about 0.07 of its potential returns per unit of risk. PHOENIX BEVERAGES LTD is currently generating about 0.19 per unit of risk. If you would invest 5,725 in MUA LTD on September 2, 2024 and sell it today you would earn a total of 625.00 from holding MUA LTD or generate 10.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MUA LTD vs. PHOENIX BEVERAGES LTD
Performance |
| Timeline |
| MUA LTD |
| PHOENIX BEVERAGES LTD |
MUA and PHOENIX BEVERAGES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MUA and PHOENIX BEVERAGES
The main advantage of trading using opposite MUA and PHOENIX BEVERAGES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MUA position performs unexpectedly, PHOENIX BEVERAGES 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 PHOENIX BEVERAGES will offset losses from the drop in PHOENIX BEVERAGES's long position.| MUA vs. FINCORP INVESTMENT LTD | MUA vs. MCB GROUP LTD | MUA vs. CAUDAN DEVELOPMENT LTD | MUA vs. LUX ISLAND RESORTS |
| PHOENIX BEVERAGES vs. FINCORP INVESTMENT LTD | PHOENIX BEVERAGES vs. MCB GROUP LTD | PHOENIX BEVERAGES vs. CAUDAN DEVELOPMENT LTD | PHOENIX BEVERAGES vs. LUX ISLAND RESORTS |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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