Correlation Between N1WL34 and Multilaser Industrial

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

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

Diversification Opportunities for N1WL34 and Multilaser Industrial

-0.84

Correlation Coefficient

N1WL34  Multilaser Industrial

Pay attention - limited upside

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

Pair Corralation between N1WL34 and Multilaser Industrial

Assuming the 90 days trading horizon N1WL34 is expected to generate 0.74 times more return on investment than Multilaser Industrial. However, N1WL34 is 1.36 times less risky than Multilaser Industrial. It trades about 0.02 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about -0.03 per unit of risk. If you would invest  6,647  in N1WL34 on September 24, 2024 and sell it today you would lose (28.00) from holding N1WL34 or give up 0.42% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.8%
Values	Daily Returns

N1WL34  vs.  Multilaser Industrial SA

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.

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.

Pair Trading with N1WL34 and Multilaser Industrial

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

The idea behind N1WL34 and Multilaser Industrial SA 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.