Correlation Between Cloud Technologies and MCI Management

Can any of the company-specific risk be diversified away by investing in both Cloud Technologies and MCI Management 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 Cloud Technologies and MCI Management into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Cloud Technologies and MCI Management

-0.11

Correlation Coefficient

Cloud Technologies  MCI Management

Good diversification

The 3 months correlation between Cloud and MCI is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cloud Technologies SA and MCI Management SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCI Management SA and Cloud 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 Cloud Technologies SA are associated (or correlated) with MCI Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCI Management SA has no effect on the direction of Cloud Technologies i.e., Cloud Technologies and MCI Management go up and down completely randomly.

Pair Corralation between Cloud Technologies and MCI Management

Assuming the 90 days trading horizon Cloud Technologies SA is expected to under-perform the MCI Management. In addition to that, Cloud Technologies is 2.34 times more volatile than MCI Management SA. It trades about -0.06 of its total potential returns per unit of risk. MCI Management SA is currently generating about 0.02 per unit of volatility. If you would invest  2,490  in MCI Management SA on September 5, 2024 and sell it today you would earn a total of  30.00  from holding MCI Management SA or generate 1.2% return on investment over 90 days.

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

Cloud Technologies SA  vs.  MCI Management SA

Cloud Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cloud Technologies SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

MCI Management SA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MCI Management SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, MCI Management is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cloud Technologies and MCI Management

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

The idea behind Cloud Technologies SA and MCI Management 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.