Correlation Between MCB GROUP and NATIONAL INVESTMENT

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

By analyzing existing cross correlation between MCB GROUP LTD and NATIONAL INVESTMENT TRUST, you can compare the effects of market volatilities on MCB GROUP and NATIONAL INVESTMENT 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 MCB GROUP with a short position of NATIONAL INVESTMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCB GROUP and NATIONAL INVESTMENT.

Diversification Opportunities for MCB GROUP and NATIONAL INVESTMENT

-0.2

Correlation Coefficient

MCB GROUP  NATIONAL INVESTMENT

Good diversification

The 3 months correlation between MCB and NATIONAL is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding MCB GROUP LTD and NATIONAL INVESTMENT TRUST in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NATIONAL INVESTMENT TRUST and MCB GROUP 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 MCB GROUP LTD are associated (or correlated) with NATIONAL INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NATIONAL INVESTMENT TRUST has no effect on the direction of MCB GROUP i.e., MCB GROUP and NATIONAL INVESTMENT go up and down completely randomly.

Pair Corralation between MCB GROUP and NATIONAL INVESTMENT

Assuming the 90 days trading horizon MCB GROUP LTD is expected to under-perform the NATIONAL INVESTMENT. But the stock apears to be less risky and, when comparing its historical volatility, MCB GROUP LTD is 2.16 times less risky than NATIONAL INVESTMENT. The stock trades about -0.06 of its potential returns per unit of risk. The NATIONAL INVESTMENT TRUST is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in NATIONAL INVESTMENT TRUST on September 23, 2024 and sell it today you would earn a total of  90.00  from holding NATIONAL INVESTMENT TRUST or generate 9.0% return on investment over 90 days.

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

MCB GROUP LTD  vs.  NATIONAL INVESTMENT TRUST

MCB GROUP LTD

Risk-Adjusted Performance

0 of 100

Very Weak

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

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, NATIONAL INVESTMENT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MCB GROUP and NATIONAL INVESTMENT

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

The idea behind MCB GROUP LTD and NATIONAL INVESTMENT TRUST 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.