Correlation Between MClean Technologies and Computer Forms

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Can any of the company-specific risk be diversified away by investing in both MClean Technologies and Computer Forms 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 MClean Technologies and Computer Forms into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MClean Technologies Bhd and Computer Forms Bhd, you can compare the effects of market volatilities on MClean Technologies and Computer Forms 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 MClean Technologies with a short position of Computer Forms. Check out your portfolio center. Please also check ongoing floating volatility patterns of MClean Technologies and Computer Forms.

Diversification Opportunities for MClean Technologies and Computer Forms

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between MClean and Computer is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding MClean Technologies Bhd and Computer Forms Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computer Forms Bhd and MClean Technologies 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 MClean Technologies Bhd are associated (or correlated) with Computer Forms. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computer Forms Bhd has no effect on the direction of MClean Technologies i.e., MClean Technologies and Computer Forms go up and down completely randomly.

Pair Corralation between MClean Technologies and Computer Forms

Assuming the 90 days trading horizon MClean Technologies Bhd is expected to generate 1.17 times more return on investment than Computer Forms. However, MClean Technologies is 1.17 times more volatile than Computer Forms Bhd. It trades about 0.02 of its potential returns per unit of risk. Computer Forms Bhd is currently generating about 0.02 per unit of risk. If you would invest  28.00  in MClean Technologies Bhd on September 12, 2024 and sell it today you would earn a total of  0.00  from holding MClean Technologies Bhd or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

MClean Technologies Bhd  vs.  Computer Forms Bhd

 Performance 
       Timeline  
MClean Technologies Bhd 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MClean Technologies Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, MClean Technologies is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.
Computer Forms Bhd 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Computer Forms Bhd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Computer Forms is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

MClean Technologies and Computer Forms Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MClean Technologies and Computer Forms

The main advantage of trading using opposite MClean Technologies and Computer Forms positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MClean Technologies position performs unexpectedly, Computer Forms 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 Computer Forms will offset losses from the drop in Computer Forms' long position.
The idea behind MClean Technologies Bhd and Computer Forms Bhd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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