Can any of the company-specific risk be diversified away by investing in both MORE and Akros Monthly 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 MORE and Akros Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MORE and Akros Monthly Payout, you can compare the effects of market volatilities on MORE and Akros Monthly 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 MORE with a short position of Akros Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of MORE and Akros Monthly.
Diversification Opportunities for MORE and Akros Monthly
The 3 months correlation between MORE and Akros is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding MORE and Akros Monthly Payout in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akros Monthly Payout and MORE 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 MORE are associated (or correlated) with Akros Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akros Monthly Payout has no effect on the direction of MORE i.e., MORE and Akros Monthly go up and down completely randomly.
If you would invest 2,144 in Akros Monthly Payout on August 30, 2023 and sell it today you would earn a total of 56.00 from holding Akros Monthly Payout or generate 2.61% return on investment over 90 days.
Over the last 90 days MORE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MORE is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Over the last 90 days Akros Monthly Payout has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Akros Monthly is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
The main advantage of trading using opposite MORE and Akros Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MORE position performs unexpectedly, Akros Monthly 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 Akros Monthly will offset losses from the drop in Akros Monthly's long position.
The idea behind MORE and Akros Monthly Payout 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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