Correlation Between ARDAGH METAL and MBANK

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

By analyzing existing cross correlation between ARDAGH METAL PACDL 0001 and MBANK, you can compare the effects of market volatilities on ARDAGH METAL and MBANK 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 ARDAGH METAL with a short position of MBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARDAGH METAL and MBANK.

Diversification Opportunities for ARDAGH METAL and MBANK

-0.31

Correlation Coefficient

ARDAGH METAL  MBANK

Very good diversification

The 3 months correlation between ARDAGH and MBANK is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding ARDAGH METAL PACDL 0001 and MBANK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MBANK and ARDAGH METAL 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 ARDAGH METAL PACDL 0001 are associated (or correlated) with MBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MBANK has no effect on the direction of ARDAGH METAL i.e., ARDAGH METAL and MBANK go up and down completely randomly.

Pair Corralation between ARDAGH METAL and MBANK

Assuming the 90 days horizon ARDAGH METAL PACDL 0001 is expected to generate 2.27 times more return on investment than MBANK. However, ARDAGH METAL is 2.27 times more volatile than MBANK. It trades about 0.19 of its potential returns per unit of risk. MBANK is currently generating about -0.13 per unit of risk. If you would invest  320.00  in ARDAGH METAL PACDL 0001 on February 21, 2024 and sell it today you would earn a total of  44.00  from holding ARDAGH METAL PACDL 0001 or generate 13.75% return on investment over 90 days.

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

ARDAGH METAL PACDL 0001  vs.  MBANK

ARDAGH METAL PACDL

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ARDAGH METAL PACDL 0001 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ARDAGH METAL may actually be approaching a critical reversion point that can send shares even higher in June 2024.

MBANK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MBANK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MBANK is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ARDAGH METAL and MBANK

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

The idea behind ARDAGH METAL PACDL 0001 and MBANK 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.