Correlation Between MBK Public and Grande Asset

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

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

Diversification Opportunities for MBK Public and Grande Asset

-0.18

Correlation Coefficient

MBK Public  Grande Asset

Good diversification

The 3 months correlation between MBK and Grande is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding MBK Public and Grande Asset Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grande Asset Hotels and MBK Public 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 MBK Public are associated (or correlated) with Grande Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grande Asset Hotels has no effect on the direction of MBK Public i.e., MBK Public and Grande Asset go up and down completely randomly.

Pair Corralation between MBK Public and Grande Asset

Assuming the 90 days trading horizon MBK Public is expected to generate 0.32 times more return on investment than Grande Asset. However, MBK Public is 3.14 times less risky than Grande Asset. It trades about 0.05 of its potential returns per unit of risk. Grande Asset Hotels is currently generating about 0.01 per unit of risk. If you would invest  1,835  in MBK Public on September 13, 2024 and sell it today you would earn a total of  105.00  from holding MBK Public or generate 5.72% return on investment over 90 days.

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

MBK Public  vs.  Grande Asset Hotels

MBK Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MBK Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, MBK Public may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grande Asset Hotels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grande Asset Hotels has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Grande Asset is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MBK Public and Grande Asset

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

The idea behind MBK Public and Grande Asset Hotels 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.