Correlation Between MF International and PPLUS Trust

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

By analyzing existing cross correlation between mF International Limited and PPLUS Trust Series, you can compare the effects of market volatilities on MF International and PPLUS Trust 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 MF International with a short position of PPLUS Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of MF International and PPLUS Trust.

Diversification Opportunities for MF International and PPLUS Trust

-0.34

Correlation Coefficient

MF International  PPLUS Trust

Very good diversification

The 3 months correlation between MFI and PPLUS is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding mF International Limited and PPLUS Trust Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPLUS Trust Series and MF International 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 mF International Limited are associated (or correlated) with PPLUS Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPLUS Trust Series has no effect on the direction of MF International i.e., MF International and PPLUS Trust go up and down completely randomly.

Pair Corralation between MF International and PPLUS Trust

Considering the 90-day investment horizon mF International Limited is expected to generate 6.96 times more return on investment than PPLUS Trust. However, MF International is 6.96 times more volatile than PPLUS Trust Series. It trades about 0.03 of its potential returns per unit of risk. PPLUS Trust Series is currently generating about -0.16 per unit of risk. If you would invest  75.00  in mF International Limited on September 16, 2024 and sell it today you would earn a total of  1.00  from holding mF International Limited or generate 1.33% return on investment over 90 days.

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

mF International Limited  vs.  PPLUS Trust Series

mF International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in mF International Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady technical and fundamental indicators, MF International demonstrated solid returns over the last few months and may actually be approaching a breakup point.

PPLUS Trust Series

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PPLUS Trust Series has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PPLUS Trust is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MF International and PPLUS Trust

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

The idea behind mF International Limited and PPLUS Trust Series 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.