Correlation Between Morgan Stanley and Multiconsult

Can any of the company-specific risk be diversified away by investing in both Morgan Stanley and Multiconsult 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 Multiconsult 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 Multiconsult AS, you can compare the effects of market volatilities on Morgan Stanley and Multiconsult 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 Multiconsult. Check out your portfolio center. Please also check ongoing floating volatility patterns of Morgan Stanley and Multiconsult.

Diversification Opportunities for Morgan Stanley and Multiconsult

0.58

Correlation Coefficient

Morgan Stanley  Multiconsult

Very weak diversification

The 3 months correlation between Morgan and Multiconsult is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Multiconsult AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multiconsult AS 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 Multiconsult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multiconsult AS has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Multiconsult go up and down completely randomly.

Pair Corralation between Morgan Stanley and Multiconsult

Given the investment horizon of 90 days Morgan Stanley is expected to generate 1.03 times less return on investment than Multiconsult. But when comparing it to its historical volatility, Morgan Stanley Direct is 1.07 times less risky than Multiconsult. It trades about 0.09 of its potential returns per unit of risk. Multiconsult AS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  18,000  in Multiconsult AS on September 21, 2024 and sell it today you would earn a total of  1,050  from holding Multiconsult AS or generate 5.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Morgan Stanley Direct  vs.  Multiconsult AS

Morgan Stanley Direct

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, Morgan Stanley is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Multiconsult AS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multiconsult AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Multiconsult is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Morgan Stanley and Multiconsult

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

The idea behind Morgan Stanley Direct and Multiconsult AS 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.

Check out your portfolio center.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.