Correlation Between Aquarius Engines and Multi Retail

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

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

Diversification Opportunities for Aquarius Engines and Multi Retail

-0.7

Correlation Coefficient

Aquarius Engines  Multi Retail

Excellent diversification

The 3 months correlation between Aquarius and Multi is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Aquarius Engines AM and Multi Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Retail Group and Aquarius Engines 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 Aquarius Engines AM are associated (or correlated) with Multi Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Retail Group has no effect on the direction of Aquarius Engines i.e., Aquarius Engines and Multi Retail go up and down completely randomly.

Pair Corralation between Aquarius Engines and Multi Retail

Assuming the 90 days trading horizon Aquarius Engines is expected to generate 20.95 times less return on investment than Multi Retail. In addition to that, Aquarius Engines is 1.28 times more volatile than Multi Retail Group. It trades about 0.01 of its total potential returns per unit of risk. Multi Retail Group is currently generating about 0.36 per unit of volatility. If you would invest  63,550  in Multi Retail Group on September 14, 2024 and sell it today you would earn a total of  53,750  from holding Multi Retail Group or generate 84.58% return on investment over 90 days.

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

Aquarius Engines AM  vs.  Multi Retail Group

Aquarius Engines

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aquarius Engines AM are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Aquarius Engines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi Retail Group

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Multi Retail sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aquarius Engines and Multi Retail

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

The idea behind Aquarius Engines AM and Multi Retail Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.