Correlation Between Menif Financial and Analyst IMS

Can any of the company-specific risk be diversified away by investing in both Menif Financial and Analyst IMS 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 Menif Financial and Analyst IMS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Menif Financial Services and Analyst IMS Investment, you can compare the effects of market volatilities on Menif Financial and Analyst IMS 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 Menif Financial with a short position of Analyst IMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Menif Financial and Analyst IMS.

Diversification Opportunities for Menif Financial and Analyst IMS

0.8

Correlation Coefficient

Menif Financial  Analyst IMS

Very poor diversification

The 3 months correlation between Menif and Analyst is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Menif Financial Services and Analyst IMS Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Analyst IMS Investment and Menif Financial 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 Menif Financial Services are associated (or correlated) with Analyst IMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Analyst IMS Investment has no effect on the direction of Menif Financial i.e., Menif Financial and Analyst IMS go up and down completely randomly.

Pair Corralation between Menif Financial and Analyst IMS

Assuming the 90 days trading horizon Menif Financial Services is expected to generate 1.45 times more return on investment than Analyst IMS. However, Menif Financial is 1.45 times more volatile than Analyst IMS Investment. It trades about 0.23 of its potential returns per unit of risk. Analyst IMS Investment is currently generating about 0.29 per unit of risk. If you would invest  120,796  in Menif Financial Services on September 2, 2024 and sell it today you would earn a total of  27,204  from holding Menif Financial Services or generate 22.52% return on investment over 90 days.

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

Menif Financial Services  vs.  Analyst IMS Investment

Menif Financial Services

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Menif Financial Services are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Menif Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Analyst IMS Investment

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Analyst IMS Investment are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Analyst IMS sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Menif Financial and Analyst IMS

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

The idea behind Menif Financial Services and Analyst IMS Investment 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.