Correlation Between Multiconsult and XXL ASA

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

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

Diversification Opportunities for Multiconsult and XXL ASA

-0.7

Correlation Coefficient

Multiconsult  XXL ASA

Excellent diversification

The 3 months correlation between Multiconsult and XXL is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Multiconsult AS and XXL ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XXL ASA and Multiconsult 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 Multiconsult AS are associated (or correlated) with XXL ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XXL ASA has no effect on the direction of Multiconsult i.e., Multiconsult and XXL ASA go up and down completely randomly.

Pair Corralation between Multiconsult and XXL ASA

Assuming the 90 days trading horizon Multiconsult AS is expected to generate 0.08 times more return on investment than XXL ASA. However, Multiconsult AS is 12.06 times less risky than XXL ASA. It trades about 0.15 of its potential returns per unit of risk. XXL ASA is currently generating about -0.12 per unit of risk. If you would invest  17,750  in Multiconsult AS on September 30, 2024 and sell it today you would earn a total of  1,850  from holding Multiconsult AS or generate 10.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Multiconsult AS  vs.  XXL ASA

Multiconsult AS

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multiconsult AS are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Multiconsult may actually be approaching a critical reversion point that can send shares even higher in January 2025.

XXL ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XXL ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Multiconsult and XXL ASA

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

The idea behind Multiconsult AS and XXL ASA 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.