Correlation Between Minor International and President Bakery

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

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

Diversification Opportunities for Minor International and President Bakery

-0.22

Correlation Coefficient

Minor International  President Bakery

Very good diversification

The 3 months correlation between Minor and President is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Minor International Public and President Bakery Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Bakery Public and Minor 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 Minor International Public are associated (or correlated) with President Bakery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Bakery Public has no effect on the direction of Minor International i.e., Minor International and President Bakery go up and down completely randomly.

Pair Corralation between Minor International and President Bakery

Assuming the 90 days trading horizon Minor International Public is expected to under-perform the President Bakery. In addition to that, Minor International is 1.79 times more volatile than President Bakery Public. It trades about -0.07 of its total potential returns per unit of risk. President Bakery Public is currently generating about 0.0 per unit of volatility. If you would invest  6,000  in President Bakery Public on September 28, 2024 and sell it today you would lose (25.00) from holding President Bakery Public or give up 0.42% of portfolio value over 90 days.

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

Minor International Public  vs.  President Bakery Public

Minor International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Minor International Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery 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 Minor International and President Bakery

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

The idea behind Minor International Public and President Bakery 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.