Correlation Between MICRONIC MYDATA and TOTAL GABON

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

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

Diversification Opportunities for MICRONIC MYDATA and TOTAL GABON

-0.09

Correlation Coefficient

MICRONIC MYDATA  TOTAL GABON

Good diversification

The 3 months correlation between MICRONIC and TOTAL is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding MICRONIC MYDATA and TOTAL GABON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOTAL GABON 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 TOTAL GABON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOTAL GABON has no effect on the direction of MICRONIC MYDATA i.e., MICRONIC MYDATA and TOTAL GABON go up and down completely randomly.

Pair Corralation between MICRONIC MYDATA and TOTAL GABON

Assuming the 90 days trading horizon MICRONIC MYDATA is expected to generate 3.7 times less return on investment than TOTAL GABON. But when comparing it to its historical volatility, MICRONIC MYDATA is 1.1 times less risky than TOTAL GABON. It trades about 0.03 of its potential returns per unit of risk. TOTAL GABON is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  15,550  in TOTAL GABON on September 3, 2024 and sell it today you would earn a total of  2,850  from holding TOTAL GABON or generate 18.33% return on investment over 90 days.

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

MICRONIC MYDATA  vs.  TOTAL GABON

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 latest stock price tumult, may contribute to shorter-term losses for the shareholders.

TOTAL GABON

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TOTAL GABON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, TOTAL GABON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MICRONIC MYDATA and TOTAL GABON

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

The idea behind MICRONIC MYDATA and TOTAL GABON 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.