Correlation Between MCBC Holdings and Marine Products

Can any of the company-specific risk be diversified away by investing in both MCBC Holdings and Marine Products 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 MCBC Holdings and Marine Products into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MCBC Holdings and Marine Products, you can compare the effects of market volatilities on MCBC Holdings and Marine Products 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 MCBC Holdings with a short position of Marine Products. Check out your portfolio center. Please also check ongoing floating volatility patterns of MCBC Holdings and Marine Products.

Diversification Opportunities for MCBC Holdings and Marine Products

0.63

Correlation Coefficient

MCBC Holdings  Marine Products

Poor diversification

The 3 months correlation between MCBC and Marine is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MCBC Holdings and Marine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Products and MCBC Holdings 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 MCBC Holdings are associated (or correlated) with Marine Products. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Products has no effect on the direction of MCBC Holdings i.e., MCBC Holdings and Marine Products go up and down completely randomly.

Pair Corralation between MCBC Holdings and Marine Products

Given the investment horizon of 90 days MCBC Holdings is expected to generate 2.03 times less return on investment than Marine Products. But when comparing it to its historical volatility, MCBC Holdings is 1.11 times less risky than Marine Products. It trades about 0.01 of its potential returns per unit of risk. Marine Products is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  987.00  in Marine Products on January 26, 2024 and sell it today you would earn a total of  123.00  from holding Marine Products or generate 12.46% return on investment over 90 days.

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

MCBC Holdings  vs.  Marine Products

MCBC Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MCBC Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, MCBC Holdings is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Marine Products

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Marine Products are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Marine Products may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Pair Trading with MCBC Holdings and Marine Products

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

The idea behind MCBC Holdings and Marine Products 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.