Correlation Between Nasdaq and MK Restaurant
Can any of the company-specific risk be diversified away by investing in both Nasdaq and MK Restaurant 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 Nasdaq and MK Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and MK Restaurant Group, you can compare the effects of market volatilities on Nasdaq and MK Restaurant 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 Nasdaq with a short position of MK Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and MK Restaurant.
Diversification Opportunities for Nasdaq and MK Restaurant
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nasdaq and MK Restaurant is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and MK Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MK Restaurant Group and Nasdaq 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 Nasdaq Inc are associated (or correlated) with MK Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MK Restaurant Group has no effect on the direction of Nasdaq i.e., Nasdaq and MK Restaurant go up and down completely randomly.
Pair Corralation between Nasdaq and MK Restaurant
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.89 times more return on investment than MK Restaurant. However, Nasdaq Inc is 1.12 times less risky than MK Restaurant. It trades about 0.04 of its potential returns per unit of risk. MK Restaurant Group is currently generating about -0.1 per unit of risk. If you would invest 6,073 in Nasdaq Inc on September 30, 2024 and sell it today you would earn a total of 1,769 from holding Nasdaq Inc or generate 29.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 97.18% |
Values | Daily Returns |
Nasdaq Inc vs. MK Restaurant Group
Performance |
Timeline |
Nasdaq Inc |
MK Restaurant Group |
Nasdaq and MK Restaurant Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and MK Restaurant
The main advantage of trading using opposite Nasdaq and MK Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, MK Restaurant 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 MK Restaurant will offset losses from the drop in MK Restaurant's long position.The idea behind Nasdaq Inc and MK Restaurant Group 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.MK Restaurant vs. CP ALL Public | MK Restaurant vs. Bangkok Dusit Medical | MK Restaurant vs. Airports of Thailand | MK Restaurant vs. Kasikornbank Public |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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