Correlation Between Multilaser Industrial and NXP Semiconductors

Can any of the company-specific risk be diversified away by investing in both Multilaser Industrial and NXP Semiconductors 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 NXP Semiconductors 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 NXP Semiconductors NV, you can compare the effects of market volatilities on Multilaser Industrial and NXP Semiconductors 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 NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multilaser Industrial and NXP Semiconductors.

Diversification Opportunities for Multilaser Industrial and NXP Semiconductors

-0.2

Correlation Coefficient

Multilaser Industrial  NXP Semiconductors

Good diversification

The 3 months correlation between Multilaser and NXP is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Multilaser Industrial SA and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors 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 NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Multilaser Industrial i.e., Multilaser Industrial and NXP Semiconductors go up and down completely randomly.

Pair Corralation between Multilaser Industrial and NXP Semiconductors

Assuming the 90 days trading horizon Multilaser Industrial SA is expected to under-perform the NXP Semiconductors. In addition to that, Multilaser Industrial is 1.78 times more volatile than NXP Semiconductors NV. It trades about -0.24 of its total potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.12 per unit of volatility. If you would invest  63,187  in NXP Semiconductors NV on September 19, 2024 and sell it today you would earn a total of  3,315  from holding NXP Semiconductors NV or generate 5.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Multilaser Industrial SA  vs.  NXP Semiconductors NV

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.

NXP Semiconductors

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NXP Semiconductors NV are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NXP Semiconductors is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Multilaser Industrial and NXP Semiconductors

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

The idea behind Multilaser Industrial SA and NXP Semiconductors NV 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.