Correlation Between New Tech and M Food

Can any of the company-specific risk be diversified away by investing in both New Tech and M Food 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 New Tech and M Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between New Tech Venture and M Food SA, you can compare the effects of market volatilities on New Tech and M Food 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 New Tech with a short position of M Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Tech and M Food.

Diversification Opportunities for New Tech and M Food

-0.19

Correlation Coefficient

New Tech  M Food

Good diversification

The 3 months correlation between New and MFD is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture and M Food SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Food SA and New Tech 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 New Tech Venture are associated (or correlated) with M Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Food SA has no effect on the direction of New Tech i.e., New Tech and M Food go up and down completely randomly.

Pair Corralation between New Tech and M Food

Assuming the 90 days trading horizon New Tech Venture is expected to under-perform the M Food. But the stock apears to be less risky and, when comparing its historical volatility, New Tech Venture is 1.48 times less risky than M Food. The stock trades about -0.15 of its potential returns per unit of risk. The M Food SA is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  99.00  in M Food SA on September 16, 2024 and sell it today you would lose (12.00) from holding M Food SA or give up 12.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.56%
Values	Daily Returns

New Tech Venture  vs.  M Food SA

New Tech Venture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Tech Venture has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

M Food SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days M Food SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with New Tech and M Food

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

The idea behind New Tech Venture and M Food SA 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.