Correlation Between CryoLife and MBANK

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

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

Diversification Opportunities for CryoLife and MBANK

-0.73

Correlation Coefficient

CryoLife  MBANK

Pay attention - limited upside

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

Pair Corralation between CryoLife and MBANK

Assuming the 90 days horizon CryoLife is expected to generate 0.79 times more return on investment than MBANK. However, CryoLife is 1.26 times less risky than MBANK. It trades about 0.08 of its potential returns per unit of risk. MBANK is currently generating about -0.04 per unit of risk. If you would invest  2,380  in CryoLife on September 29, 2024 and sell it today you would earn a total of  420.00  from holding CryoLife or generate 17.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.22%
Values	Daily Returns

CryoLife  vs.  MBANK

CryoLife

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CryoLife are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CryoLife reported solid returns over the last few months and may actually be approaching a breakup point.

MBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CryoLife and MBANK

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

The idea behind CryoLife and MBANK 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..