Correlation Between Carlson Investments and MBank SA

Can any of the company-specific risk be diversified away by investing in both Carlson Investments and MBank SA 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 Carlson Investments and MBank SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Carlson Investments SA and mBank SA, you can compare the effects of market volatilities on Carlson Investments and MBank SA 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 Carlson Investments with a short position of MBank SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carlson Investments and MBank SA.

Diversification Opportunities for Carlson Investments and MBank SA

0.73

Correlation Coefficient

Carlson Investments  MBank SA

Poor diversification

The 3 months correlation between Carlson and MBank is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Carlson Investments SA and mBank SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on mBank SA and Carlson Investments 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 Carlson Investments SA are associated (or correlated) with MBank SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of mBank SA has no effect on the direction of Carlson Investments i.e., Carlson Investments and MBank SA go up and down completely randomly.

Pair Corralation between Carlson Investments and MBank SA

Assuming the 90 days trading horizon Carlson Investments SA is expected to generate 1.47 times more return on investment than MBank SA. However, Carlson Investments is 1.47 times more volatile than mBank SA. It trades about -0.07 of its potential returns per unit of risk. mBank SA is currently generating about -0.12 per unit of risk. If you would invest  524.00  in Carlson Investments SA on August 30, 2024 and sell it today you would lose (82.00) from holding Carlson Investments SA or give up 15.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Carlson Investments SA  vs.  mBank SA

Carlson Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carlson Investments SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

mBank SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days mBank SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Carlson Investments and MBank SA

The main advantage of trading using opposite Carlson Investments and MBank SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carlson Investments position performs unexpectedly, MBank SA 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 MBank SA will offset losses from the drop in MBank SA's long position.

The idea behind Carlson Investments SA and mBank SA 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.