Correlation Between Mader Group and Unifirst

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

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

Diversification Opportunities for Mader Group and Unifirst

-0.14

Correlation Coefficient

Mader Group  Unifirst

Good diversification

The 3 months correlation between Mader and Unifirst is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Mader Group Limited and Unifirst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unifirst and Mader Group 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 Mader Group Limited are associated (or correlated) with Unifirst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unifirst has no effect on the direction of Mader Group i.e., Mader Group and Unifirst go up and down completely randomly.

Pair Corralation between Mader Group and Unifirst

Assuming the 90 days horizon Mader Group Limited is expected to generate 1.65 times more return on investment than Unifirst. However, Mader Group is 1.65 times more volatile than Unifirst. It trades about 0.04 of its potential returns per unit of risk. Unifirst is currently generating about 0.02 per unit of risk. If you would invest  249.00  in Mader Group Limited on September 3, 2024 and sell it today you would earn a total of  108.00  from holding Mader Group Limited or generate 43.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.96%
Values	Daily Returns

Mader Group Limited  vs.  Unifirst

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 uncertain 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.

Unifirst

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unifirst are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Unifirst may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mader Group and Unifirst

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

The idea behind Mader Group Limited and Unifirst 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.