Correlation Between MICRONIC MYDATA and Freeport McMoRan

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

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

Diversification Opportunities for MICRONIC MYDATA and Freeport McMoRan

-0.29

Correlation Coefficient

MICRONIC MYDATA  Freeport McMoRan

Very good diversification

The 3 months correlation between MICRONIC and Freeport is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding MICRONIC MYDATA and Freeport McMoRan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeport McMoRan and MICRONIC MYDATA 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 MICRONIC MYDATA are associated (or correlated) with Freeport McMoRan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeport McMoRan has no effect on the direction of MICRONIC MYDATA i.e., MICRONIC MYDATA and Freeport McMoRan go up and down completely randomly.

Pair Corralation between MICRONIC MYDATA and Freeport McMoRan

Assuming the 90 days trading horizon MICRONIC MYDATA is expected to generate 1.09 times more return on investment than Freeport McMoRan. However, MICRONIC MYDATA is 1.09 times more volatile than Freeport McMoRan. It trades about 0.03 of its potential returns per unit of risk. Freeport McMoRan is currently generating about -0.09 per unit of risk. If you would invest  3,400  in MICRONIC MYDATA on September 25, 2024 and sell it today you would earn a total of  102.00  from holding MICRONIC MYDATA or generate 3.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

MICRONIC MYDATA  vs.  Freeport McMoRan

MICRONIC MYDATA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MICRONIC MYDATA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MICRONIC MYDATA is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Freeport McMoRan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeport McMoRan has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MICRONIC MYDATA and Freeport McMoRan

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

The idea behind MICRONIC MYDATA and Freeport McMoRan 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.