Correlation Between MONA and XNK

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

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

Diversification Opportunities for MONA and XNK

-0.21

Correlation Coefficient

MONA  XNK

Very good diversification

The 3 months correlation between MONA and XNK is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding MONA and XNK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XNK and MONA 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 MONA are associated (or correlated) with XNK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XNK has no effect on the direction of MONA i.e., MONA and XNK go up and down completely randomly.

Pair Corralation between MONA and XNK

If you would invest  0.11  in XNK on January 24, 2024 and sell it today you would earn a total of  0.00  from holding XNK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

MONA  vs.  XNK

MONA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MONA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, MONA exhibited solid returns over the last few months and may actually be approaching a breakup point.

XNK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XNK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward-looking signals, XNK is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MONA and XNK

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

The idea behind MONA and XNK 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.