Correlation Between President Automobile and MFC Industrial
Can any of the company-specific risk be diversified away by investing in both President Automobile and MFC Industrial 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 President Automobile and MFC Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between President Automobile Industries and MFC Industrial Investment, you can compare the effects of market volatilities on President Automobile and MFC Industrial 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 President Automobile with a short position of MFC Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of President Automobile and MFC Industrial.
Diversification Opportunities for President Automobile and MFC Industrial
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between President and MFC is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding President Automobile Industrie and MFC Industrial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Industrial Investment and President Automobile 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 President Automobile Industries are associated (or correlated) with MFC Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Industrial Investment has no effect on the direction of President Automobile i.e., President Automobile and MFC Industrial go up and down completely randomly.
Pair Corralation between President Automobile and MFC Industrial
Assuming the 90 days trading horizon President Automobile Industries is expected to under-perform the MFC Industrial. In addition to that, President Automobile is 1.41 times more volatile than MFC Industrial Investment. It trades about -0.13 of its total potential returns per unit of risk. MFC Industrial Investment is currently generating about 0.22 per unit of volatility. If you would invest 557.00 in MFC Industrial Investment on September 2, 2024 and sell it today you would earn a total of 78.00 from holding MFC Industrial Investment or generate 14.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
President Automobile Industrie vs. MFC Industrial Investment
Performance |
| Timeline |
| President Automobile |
| MFC Industrial Investment |
President Automobile and MFC Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with President Automobile and MFC Industrial
The main advantage of trading using opposite President Automobile and MFC Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Automobile position performs unexpectedly, MFC Industrial 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 MFC Industrial will offset losses from the drop in MFC Industrial's long position.| President Automobile vs. Phol Dhanya Public | President Automobile vs. PTT Oil and | President Automobile vs. Pico Public | President Automobile vs. Pioneer Motor Public |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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