Correlation Between Multi Retail and Medivie Therapeutic

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Can any of the company-specific risk be diversified away by investing in both Multi Retail and Medivie Therapeutic 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 Multi Retail and Medivie Therapeutic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Retail Group and Medivie Therapeutic, you can compare the effects of market volatilities on Multi Retail and Medivie Therapeutic 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 Multi Retail with a short position of Medivie Therapeutic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Retail and Medivie Therapeutic.

Diversification Opportunities for Multi Retail and Medivie Therapeutic

-0.86
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Multi and Medivie is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Multi Retail Group and Medivie Therapeutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medivie Therapeutic and Multi Retail 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 Multi Retail Group are associated (or correlated) with Medivie Therapeutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medivie Therapeutic has no effect on the direction of Multi Retail i.e., Multi Retail and Medivie Therapeutic go up and down completely randomly.

Pair Corralation between Multi Retail and Medivie Therapeutic

Assuming the 90 days trading horizon Multi Retail Group is expected to generate 0.66 times more return on investment than Medivie Therapeutic. However, Multi Retail Group is 1.52 times less risky than Medivie Therapeutic. It trades about 0.36 of its potential returns per unit of risk. Medivie Therapeutic is currently generating about -0.07 per unit of risk. If you would invest  62,160  in Multi Retail Group on September 26, 2024 and sell it today you would earn a total of  51,840  from holding Multi Retail Group or generate 83.4% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Multi Retail Group  vs.  Medivie Therapeutic

 Performance 
       Timeline  
Multi Retail Group 

Risk-Adjusted Performance

28 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Multi Retail sustained solid returns over the last few months and may actually be approaching a breakup point.
Medivie Therapeutic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Medivie Therapeutic has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Multi Retail and Medivie Therapeutic Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Multi Retail and Medivie Therapeutic

The main advantage of trading using opposite Multi Retail and Medivie Therapeutic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Retail position performs unexpectedly, Medivie Therapeutic 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 Medivie Therapeutic will offset losses from the drop in Medivie Therapeutic's long position.
The idea behind Multi Retail Group and Medivie Therapeutic 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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