Correlation Between Vita Coco and Mader Group

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

By analyzing existing cross correlation between Vita Coco and Mader Group Limited, you can compare the effects of market volatilities on Vita Coco and Mader Group 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 Vita Coco with a short position of Mader Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Mader Group.

Diversification Opportunities for Vita Coco and Mader Group

-0.09

Correlation Coefficient

Vita Coco  Mader Group

Good diversification

The 3 months correlation between Vita and Mader is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco and Mader Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mader Group Limited and Vita Coco 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 Vita Coco are associated (or correlated) with Mader Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mader Group Limited has no effect on the direction of Vita Coco i.e., Vita Coco and Mader Group go up and down completely randomly.

Pair Corralation between Vita Coco and Mader Group

Given the investment horizon of 90 days Vita Coco is expected to generate 1.03 times more return on investment than Mader Group. However, Vita Coco is 1.03 times more volatile than Mader Group Limited. It trades about 0.22 of its potential returns per unit of risk. Mader Group Limited is currently generating about -0.05 per unit of risk. If you would invest  2,612  in Vita Coco on August 30, 2024 and sell it today you would earn a total of  950.00  from holding Vita Coco or generate 36.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Vita Coco  vs.  Mader Group Limited

Vita Coco

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vita Coco are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady fundamental indicators, Vita Coco displayed solid returns over the last few months and may actually be approaching a breakup point.

Mader Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mader Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vita Coco and Mader Group

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

The idea behind Vita Coco and Mader Group Limited 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.