Correlation Between Magic Empire and Greenhill

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

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

Diversification Opportunities for Magic Empire and Greenhill

-0.33

Correlation Coefficient

Magic Empire  Greenhill

Very good diversification

The 3 months correlation between Magic and Greenhill is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Magic Empire Global and Greenhill Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenhill and Magic Empire 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 Magic Empire Global are associated (or correlated) with Greenhill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenhill has no effect on the direction of Magic Empire i.e., Magic Empire and Greenhill go up and down completely randomly.

Pair Corralation between Magic Empire and Greenhill

If you would invest  45.00  in Magic Empire Global on July 16, 2024 and sell it today you would earn a total of  7.00  from holding Magic Empire Global or generate 15.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.76%
Values	Daily Returns

Magic Empire Global  vs.  Greenhill Co

Magic Empire Global

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Empire Global are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Magic Empire may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Greenhill

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Greenhill Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical indicators, Greenhill is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Magic Empire and Greenhill

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

The idea behind Magic Empire Global and Greenhill Co 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.