Correlation Between Goodtech and Multiconsult

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

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

Diversification Opportunities for Goodtech and Multiconsult

-0.78

Correlation Coefficient

Goodtech  Multiconsult

Pay attention - limited upside

The 3 months correlation between Goodtech and Multiconsult is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding Goodtech and Multiconsult AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multiconsult AS and Goodtech 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 Goodtech are associated (or correlated) with Multiconsult. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multiconsult AS has no effect on the direction of Goodtech i.e., Goodtech and Multiconsult go up and down completely randomly.

Pair Corralation between Goodtech and Multiconsult

Assuming the 90 days trading horizon Goodtech is expected to under-perform the Multiconsult. In addition to that, Goodtech is 2.11 times more volatile than Multiconsult AS. It trades about -0.06 of its total potential returns per unit of risk. Multiconsult AS is currently generating about 0.09 per unit of volatility. If you would invest  18,000  in Multiconsult AS on September 21, 2024 and sell it today you would earn a total of  1,050  from holding Multiconsult AS or generate 5.83% return on investment over 90 days.

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

Goodtech  vs.  Multiconsult AS

Goodtech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goodtech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Multiconsult AS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Multiconsult AS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Multiconsult is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Goodtech and Multiconsult

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

The idea behind Goodtech and Multiconsult AS 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.