Correlation Between Morgan Stanley and CN YANGTPWR

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

By analyzing existing cross correlation between Morgan Stanley Direct and CN YANGTPWR GDR, you can compare the effects of market volatilities on Morgan Stanley and CN YANGTPWR 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 CN YANGTPWR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and CN YANGTPWR.

Diversification Opportunities for Morgan Stanley and CN YANGTPWR

-0.29

Correlation Coefficient

Morgan Stanley  CN YANGTPWR

Very good diversification

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

Pair Corralation between Morgan Stanley and CN YANGTPWR

Given the investment horizon of 90 days Morgan Stanley is expected to generate 2.13 times less return on investment than CN YANGTPWR. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.38 times less risky than CN YANGTPWR. It trades about 0.03 of its potential returns per unit of risk. CN YANGTPWR GDR is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,275  in CN YANGTPWR GDR on September 19, 2024 and sell it today you would earn a total of  1,245  from holding CN YANGTPWR GDR or generate 54.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.26%
Values	Daily Returns

Morgan Stanley Direct  vs.  CN YANGTPWR GDR

Morgan Stanley Direct

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile fundamental indicators, Morgan Stanley may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CN YANGTPWR GDR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN YANGTPWR GDR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CN YANGTPWR may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Morgan Stanley and CN YANGTPWR

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

The idea behind Morgan Stanley Direct and CN YANGTPWR GDR 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.