Correlation Between Morgan Stanley and Samfine Creation

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

Diversification Opportunities for Morgan Stanley and Samfine Creation

0.56

Correlation Coefficient

Morgan Stanley  Samfine Creation

Very weak diversification

The 3 months correlation between Morgan and Samfine is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Morgan Stanley Direct and Samfine Creation Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samfine Creation Holdings 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 Samfine Creation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samfine Creation Holdings has no effect on the direction of Morgan Stanley i.e., Morgan Stanley and Samfine Creation go up and down completely randomly.

Pair Corralation between Morgan Stanley and Samfine Creation

Given the investment horizon of 90 days Morgan Stanley Direct is expected to generate 0.04 times more return on investment than Samfine Creation. However, Morgan Stanley Direct is 24.97 times less risky than Samfine Creation. It trades about 0.16 of its potential returns per unit of risk. Samfine Creation Holdings is currently generating about -0.21 per unit of risk. If you would invest  2,055  in Morgan Stanley Direct on September 17, 2024 and sell it today you would earn a total of  63.00  from holding Morgan Stanley Direct or generate 3.07% return on investment over 90 days.

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

Morgan Stanley Direct  vs.  Samfine Creation Holdings

Morgan Stanley Direct

Risk-Adjusted Performance

12 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Direct are ranked lower than 12 (%) 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.

Samfine Creation Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samfine Creation Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady technical indicators, Samfine Creation reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Morgan Stanley and Samfine Creation

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

The idea behind Morgan Stanley Direct and Samfine Creation Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.