Correlation Between Megachem Public and MC Group

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

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

Diversification Opportunities for Megachem Public and MC Group

0.38

Correlation Coefficient

Megachem Public  MC Group

Weak diversification

The 3 months correlation between Megachem and MC Group is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Megachem Public and MC Group Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MC Group Public and Megachem Public 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 Megachem Public are associated (or correlated) with MC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MC Group Public has no effect on the direction of Megachem Public i.e., Megachem Public and MC Group go up and down completely randomly.

Pair Corralation between Megachem Public and MC Group

Assuming the 90 days trading horizon Megachem Public is expected to generate 82.47 times more return on investment than MC Group. However, Megachem Public is 82.47 times more volatile than MC Group Public. It trades about 0.12 of its potential returns per unit of risk. MC Group Public is currently generating about 0.0 per unit of risk. If you would invest  0.00  in Megachem Public on September 3, 2024 and sell it today you would earn a total of  204.00  from holding Megachem Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Megachem Public  vs.  MC Group Public

Megachem Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Megachem Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Megachem Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

MC Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MC Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, MC Group is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Megachem Public and MC Group

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

The idea behind Megachem Public and MC Group Public 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.

Check out your portfolio center.

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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.