Correlation Between Multilaser Industrial and N1WL34

Can any of the company-specific risk be diversified away by investing in both Multilaser Industrial and N1WL34 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 Multilaser Industrial and N1WL34 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multilaser Industrial SA and N1WL34, you can compare the effects of market volatilities on Multilaser Industrial and N1WL34 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 Multilaser Industrial with a short position of N1WL34. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multilaser Industrial and N1WL34.

Diversification Opportunities for Multilaser Industrial and N1WL34

-0.84

Correlation Coefficient

Multilaser Industrial  N1WL34

Pay attention - limited upside

The 3 months correlation between Multilaser and N1WL34 is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Multilaser Industrial SA and N1WL34 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N1WL34 and Multilaser Industrial 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 Multilaser Industrial SA are associated (or correlated) with N1WL34. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N1WL34 has no effect on the direction of Multilaser Industrial i.e., Multilaser Industrial and N1WL34 go up and down completely randomly.

Pair Corralation between Multilaser Industrial and N1WL34

Assuming the 90 days trading horizon Multilaser Industrial SA is expected to under-perform the N1WL34. In addition to that, Multilaser Industrial is 1.01 times more volatile than N1WL34. It trades about -0.04 of its total potential returns per unit of risk. N1WL34 is currently generating about 0.06 per unit of volatility. If you would invest  4,347  in N1WL34 on September 24, 2024 and sell it today you would earn a total of  2,272  from holding N1WL34 or generate 52.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	99.2%
Values	Daily Returns

Multilaser Industrial SA  vs.  N1WL34

Multilaser Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multilaser Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

N1WL34

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in N1WL34 are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, N1WL34 sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multilaser Industrial and N1WL34

The main advantage of trading using opposite Multilaser Industrial and N1WL34 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multilaser Industrial position performs unexpectedly, N1WL34 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 N1WL34 will offset losses from the drop in N1WL34's long position.

The idea behind Multilaser Industrial SA and N1WL34 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.

Check out your portfolio center.

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 Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.