Correlation Between Mobile Max and GODM Investments

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

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

Diversification Opportunities for Mobile Max and GODM Investments

0.72

Correlation Coefficient

Mobile Max  GODM Investments

Poor diversification

The 3 months correlation between Mobile and GODM is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mobile Max M and GODM Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GODM Investments and Mobile Max 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 Mobile Max M are associated (or correlated) with GODM Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GODM Investments has no effect on the direction of Mobile Max i.e., Mobile Max and GODM Investments go up and down completely randomly.

Pair Corralation between Mobile Max and GODM Investments

Assuming the 90 days trading horizon Mobile Max M is expected to generate 0.97 times more return on investment than GODM Investments. However, Mobile Max M is 1.03 times less risky than GODM Investments. It trades about -0.03 of its potential returns per unit of risk. GODM Investments is currently generating about -0.06 per unit of risk. If you would invest  3,410  in Mobile Max M on September 21, 2024 and sell it today you would lose (240.00) from holding Mobile Max M or give up 7.04% of portfolio value over 90 days.

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

Mobile Max M  vs.  GODM Investments

Mobile Max M

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mobile Max M has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GODM Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GODM Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mobile Max and GODM Investments

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

The idea behind Mobile Max M and GODM Investments 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.