Correlation Between Flow Traders and Malvern International

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

By analyzing existing cross correlation between Flow Traders NV and Malvern International, you can compare the effects of market volatilities on Flow Traders and Malvern International 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 Flow Traders with a short position of Malvern International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flow Traders and Malvern International.

Diversification Opportunities for Flow Traders and Malvern International

0.18

Correlation Coefficient

Flow Traders  Malvern International

Average diversification

The 3 months correlation between Flow and Malvern is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Flow Traders NV and Malvern International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malvern International and Flow Traders 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 Flow Traders NV are associated (or correlated) with Malvern International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malvern International has no effect on the direction of Flow Traders i.e., Flow Traders and Malvern International go up and down completely randomly.

Pair Corralation between Flow Traders and Malvern International

Assuming the 90 days trading horizon Flow Traders is expected to generate 3.97 times less return on investment than Malvern International. But when comparing it to its historical volatility, Flow Traders NV is 1.87 times less risky than Malvern International. It trades about 0.06 of its potential returns per unit of risk. Malvern International is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,710  in Malvern International on October 8, 2024 and sell it today you would earn a total of  340.00  from holding Malvern International or generate 19.88% return on investment over 90 days.

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

Flow Traders NV  vs.  Malvern International

Flow Traders NV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flow Traders NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Flow Traders is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Malvern International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Malvern International are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Malvern International unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Flow Traders and Malvern International

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

The idea behind Flow Traders NV and Malvern International 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.