Correlation Between Marathon Digital and MKDWELL Tech

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

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

Diversification Opportunities for Marathon Digital and MKDWELL Tech

-0.39

Correlation Coefficient

Marathon Digital  MKDWELL Tech

Very good diversification

The 3 months correlation between Marathon and MKDWELL is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Marathon Digital Holdings and MKDWELL Tech Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKDWELL Tech Ordinary and Marathon Digital 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 Marathon Digital Holdings are associated (or correlated) with MKDWELL Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKDWELL Tech Ordinary has no effect on the direction of Marathon Digital i.e., Marathon Digital and MKDWELL Tech go up and down completely randomly.

Pair Corralation between Marathon Digital and MKDWELL Tech

Given the investment horizon of 90 days Marathon Digital Holdings is expected to generate 1.1 times more return on investment than MKDWELL Tech. However, Marathon Digital is 1.1 times more volatile than MKDWELL Tech Ordinary. It trades about 0.17 of its potential returns per unit of risk. MKDWELL Tech Ordinary is currently generating about -0.03 per unit of risk. If you would invest  1,526  in Marathon Digital Holdings on September 2, 2024 and sell it today you would earn a total of  1,216  from holding Marathon Digital Holdings or generate 79.69% return on investment over 90 days.

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

Marathon Digital Holdings  vs.  MKDWELL Tech Ordinary

Marathon Digital Holdings

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marathon Digital Holdings are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Marathon Digital sustained solid returns over the last few months and may actually be approaching a breakup point.

MKDWELL Tech Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKDWELL Tech Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Marathon Digital and MKDWELL Tech

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

The idea behind Marathon Digital Holdings and MKDWELL Tech Ordinary 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.