Correlation Between Morgan Stanley and APAC Resources

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and APAC Resources 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 Morgan Stanley and APAC Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Morgan Stanley and APAC Resources Limited, you can compare the effects of market volatilities on Morgan Stanley and APAC Resources 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 Morgan Stanley with a short position of APAC Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and APAC Resources.

Diversification Opportunities for Morgan Stanley and APAC Resources

-0.5

Correlation Coefficient

Morgan Stanley  APAC Resources

Very good diversification

The 3 months correlation between Morgan and APAC is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley and APAC Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on APAC Resources and Morgan Stanley 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 Morgan Stanley are associated (or correlated) with APAC Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of APAC Resources has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and APAC Resources go up and down completely randomly.

Pair Corralation between Morgan Stanley and APAC Resources

Assuming the 90 days horizon Morgan Stanley is expected to generate 0.14 times more return on investment than APAC Resources. However, Morgan Stanley is 7.19 times less risky than APAC Resources. It trades about 0.01 of its potential returns per unit of risk. APAC Resources Limited is currently generating about -0.08 per unit of risk. If you would invest  2,437  in Morgan Stanley on September 30, 2024 and sell it today you would earn a total of  17.00  from holding Morgan Stanley or generate 0.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	79.37%
Values	Daily Returns

Morgan Stanley  vs.  APAC Resources Limited

Morgan Stanley

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Morgan Stanley has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Morgan Stanley is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

APAC Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days APAC Resources Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, APAC Resources is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Morgan Stanley and APAC Resources

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

The idea behind Morgan Stanley and APAC Resources Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.