Correlation Between MCB Investment and JS Investments

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

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

Diversification Opportunities for MCB Investment and JS Investments

0.84

Correlation Coefficient

MCB Investment  JS Investments

Very poor diversification

The 3 months correlation between MCB and JSIL is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MCB Investment Manag and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments and MCB Investment 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 MCB Investment Manag are associated (or correlated) with JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of MCB Investment i.e., MCB Investment and JS Investments go up and down completely randomly.

Pair Corralation between MCB Investment and JS Investments

Assuming the 90 days trading horizon MCB Investment Manag is expected to generate 1.28 times more return on investment than JS Investments. However, MCB Investment is 1.28 times more volatile than JS Investments. It trades about 0.21 of its potential returns per unit of risk. JS Investments is currently generating about 0.17 per unit of risk. If you would invest  8,601  in MCB Investment Manag on April 22, 2025 and sell it today you would earn a total of  4,870  from holding MCB Investment Manag or generate 56.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	88.52%
Values	Daily Returns

MCB Investment Manag  vs.  JS Investments

MCB Investment Manag

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MCB Investment Manag are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite quite weak fundamental drivers, MCB Investment disclosed solid returns over the last few months and may actually be approaching a breakup point.

JS Investments

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in JS Investments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, JS Investments sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MCB Investment and JS Investments

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

The idea behind MCB Investment Manag and JS Investments 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.