Correlation Between Melstar Information and Future Retail

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

By analyzing existing cross correlation between Melstar Information Technologies and Future Retail Limited, you can compare the effects of market volatilities on Melstar Information and Future Retail 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 Melstar Information with a short position of Future Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Melstar Information and Future Retail.

Diversification Opportunities for Melstar Information and Future Retail

0.0

Correlation Coefficient

Melstar Information  Future Retail

Pay attention - limited upside

The 3 months correlation between Melstar and Future is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Melstar Information Technologi and Future Retail Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Retail Limited and Melstar Information 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 Melstar Information Technologies are associated (or correlated) with Future Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Retail Limited has no effect on the direction of Melstar Information i.e., Melstar Information and Future Retail go up and down completely randomly.

Pair Corralation between Melstar Information and Future Retail

Assuming the 90 days trading horizon Melstar Information Technologies is expected to generate 24.29 times more return on investment than Future Retail. However, Melstar Information is 24.29 times more volatile than Future Retail Limited. It trades about 0.06 of its potential returns per unit of risk. Future Retail Limited is currently generating about -0.02 per unit of risk. If you would invest  305.00  in Melstar Information Technologies on September 24, 2024 and sell it today you would earn a total of  120.00  from holding Melstar Information Technologies or generate 39.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.66%
Values	Daily Returns

Melstar Information Technologi  vs.  Future Retail Limited

Melstar Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Melstar Information Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Melstar Information is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Future Retail Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Future Retail Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Future Retail is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Melstar Information and Future Retail

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

The idea behind Melstar Information Technologies and Future Retail Limited 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.