Correlation Between MB Securities and Fecon Mining

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

By analyzing existing cross correlation between MB Securities JSC and Fecon Mining JSC, you can compare the effects of market volatilities on MB Securities and Fecon Mining 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 MB Securities with a short position of Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of MB Securities and Fecon Mining.

Diversification Opportunities for MB Securities and Fecon Mining

0.27

Correlation Coefficient

MB Securities  Fecon Mining

Modest diversification

The 3 months correlation between MBS and Fecon is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding MB Securities JSC and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC and MB Securities 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 MB Securities JSC are associated (or correlated) with Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of MB Securities i.e., MB Securities and Fecon Mining go up and down completely randomly.

Pair Corralation between MB Securities and Fecon Mining

Assuming the 90 days trading horizon MB Securities JSC is expected to under-perform the Fecon Mining. In addition to that, MB Securities is 1.15 times more volatile than Fecon Mining JSC. It trades about -0.06 of its total potential returns per unit of risk. Fecon Mining JSC is currently generating about 0.12 per unit of volatility. If you would invest  320,976  in Fecon Mining JSC on September 29, 2024 and sell it today you would earn a total of  44,024  from holding Fecon Mining JSC or generate 13.72% return on investment over 90 days.

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

MB Securities JSC  vs.  Fecon Mining JSC

MB Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MB Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Fecon Mining JSC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fecon Mining JSC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Fecon Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MB Securities and Fecon Mining

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

The idea behind MB Securities JSC and Fecon Mining JSC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.