Correlation Between Multi Commodity and Transport

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

By analyzing existing cross correlation between Multi Commodity Exchange and Transport of, you can compare the effects of market volatilities on Multi Commodity and Transport 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 Multi Commodity with a short position of Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Commodity and Transport.

Diversification Opportunities for Multi Commodity and Transport

-0.01

Correlation Coefficient

Multi Commodity  Transport

Good diversification

The 3 months correlation between Multi and Transport is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Multi Commodity Exchange and Transport of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Multi Commodity 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 Multi Commodity Exchange are associated (or correlated) with Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport has no effect on the direction of Multi Commodity i.e., Multi Commodity and Transport go up and down completely randomly.

Pair Corralation between Multi Commodity and Transport

Assuming the 90 days trading horizon Multi Commodity Exchange is expected to generate 0.85 times more return on investment than Transport. However, Multi Commodity Exchange is 1.18 times less risky than Transport. It trades about 0.15 of its potential returns per unit of risk. Transport of is currently generating about -0.01 per unit of risk. If you would invest  519,516  in Multi Commodity Exchange on September 3, 2024 and sell it today you would earn a total of  99,019  from holding Multi Commodity Exchange or generate 19.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Multi Commodity Exchange  vs.  Transport of

Multi Commodity Exchange

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Commodity Exchange are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Multi Commodity exhibited solid returns over the last few months and may actually be approaching a breakup point.

Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transport of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Transport is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Multi Commodity and Transport

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

The idea behind Multi Commodity Exchange and Transport of 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 Anywhere module to track or share privately all of your investments from the convenience of any device.