Correlation Between MGI Digital and Groupe CRIT

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

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

Diversification Opportunities for MGI Digital and Groupe CRIT

0.77

Correlation Coefficient

MGI Digital  Groupe CRIT

Poor diversification

The 3 months correlation between MGI and Groupe is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding MGI Digital and Groupe CRIT SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Groupe CRIT SA and MGI Digital 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 MGI Digital are associated (or correlated) with Groupe CRIT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Groupe CRIT SA has no effect on the direction of MGI Digital i.e., MGI Digital and Groupe CRIT go up and down completely randomly.

Pair Corralation between MGI Digital and Groupe CRIT

Assuming the 90 days trading horizon MGI Digital is expected to under-perform the Groupe CRIT. In addition to that, MGI Digital is 1.1 times more volatile than Groupe CRIT SA. It trades about -0.04 of its total potential returns per unit of risk. Groupe CRIT SA is currently generating about 0.01 per unit of volatility. If you would invest  6,300  in Groupe CRIT SA on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Groupe CRIT SA or generate 0.0% return on investment over 90 days.

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

MGI Digital  vs.  Groupe CRIT SA

MGI Digital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MGI Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, MGI Digital is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Groupe CRIT SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Groupe CRIT SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Groupe CRIT is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with MGI Digital and Groupe CRIT

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

The idea behind MGI Digital and Groupe CRIT 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.