Correlation Between Magna International and Molekule

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

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

Diversification Opportunities for Magna International and Molekule

0.77

Correlation Coefficient

Magna International  Molekule

Poor diversification

The 3 months correlation between Magna and Molekule is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Molekule Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molekule Group and Magna International 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 Magna International are associated (or correlated) with Molekule. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molekule Group has no effect on the direction of Magna International i.e., Magna International and Molekule go up and down completely randomly.

Pair Corralation between Magna International and Molekule

If you would invest  225.00  in Molekule Group on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Molekule Group or generate 0.0% return on investment over 90 days.

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

Magna International  vs.  Molekule Group

Magna International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Magna International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating technical and fundamental indicators, Magna International may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Molekule Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Magna International and Molekule

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

The idea behind Magna International and Molekule 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.