Correlation Between MFC Strategic and MFC Nichada

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

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

Diversification Opportunities for MFC Strategic and MFC Nichada

0.07

Correlation Coefficient

MFC Strategic  MFC Nichada

Significant diversification

The 3 months correlation between MFC and MFC is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding MFC Strategic Storage and MFC Nichada Thani Property in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFC Nichada Thani and MFC Strategic 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 MFC Strategic Storage are associated (or correlated) with MFC Nichada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFC Nichada Thani has no effect on the direction of MFC Strategic i.e., MFC Strategic and MFC Nichada go up and down completely randomly.

Pair Corralation between MFC Strategic and MFC Nichada

Assuming the 90 days trading horizon MFC Strategic Storage is expected to generate 9.01 times more return on investment than MFC Nichada. However, MFC Strategic is 9.01 times more volatile than MFC Nichada Thani Property. It trades about 0.44 of its potential returns per unit of risk. MFC Nichada Thani Property is currently generating about 0.04 per unit of risk. If you would invest  600.00  in MFC Strategic Storage on September 14, 2024 and sell it today you would earn a total of  150.00  from holding MFC Strategic Storage or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	89.58%
Values	Daily Returns

MFC Strategic Storage  vs.  MFC Nichada Thani Property

MFC Strategic Storage

Risk-Adjusted Performance

37 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in MFC Strategic Storage are ranked lower than 37 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MFC Strategic sustained solid returns over the last few months and may actually be approaching a breakup point.

MFC Nichada Thani

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MFC Nichada Thani Property has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, MFC Nichada is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with MFC Strategic and MFC Nichada

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

The idea behind MFC Strategic Storage and MFC Nichada Thani Property 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.