Correlation Between Morgan Stanley and India Closed

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

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

Diversification Opportunities for Morgan Stanley and India Closed

0.78

Correlation Coefficient

Morgan Stanley  India Closed

Poor diversification

The 3 months correlation between Morgan and India is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley India and India Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on India Closed and Morgan Stanley 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 Morgan Stanley India are associated (or correlated) with India Closed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of India Closed has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and India Closed go up and down completely randomly.

Pair Corralation between Morgan Stanley and India Closed

Considering the 90-day investment horizon Morgan Stanley India is expected to generate 0.77 times more return on investment than India Closed. However, Morgan Stanley India is 1.3 times less risky than India Closed. It trades about 0.14 of its potential returns per unit of risk. India Closed is currently generating about 0.05 per unit of risk. If you would invest  1,941  in Morgan Stanley India on September 12, 2024 and sell it today you would earn a total of  1,011  from holding Morgan Stanley India or generate 52.09% return on investment over 90 days.

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

Morgan Stanley India  vs.  India Closed

Morgan Stanley India

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley India are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. Despite nearly stable forward indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

India Closed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days India Closed has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy technical and fundamental indicators, India Closed is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and India Closed

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

The idea behind Morgan Stanley India and India Closed 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.