Correlation Between Amotiv and Mullen

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

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

Diversification Opportunities for Amotiv and Mullen

-0.56

Correlation Coefficient

Amotiv  Mullen

Excellent diversification

The 3 months correlation between Amotiv and Mullen is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Amotiv Limited and Mullen Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mullen Group and Amotiv 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 Amotiv Limited are associated (or correlated) with Mullen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mullen Group has no effect on the direction of Amotiv i.e., Amotiv and Mullen go up and down completely randomly.

Pair Corralation between Amotiv and Mullen

Assuming the 90 days trading horizon Amotiv Limited is expected to generate 1.23 times more return on investment than Mullen. However, Amotiv is 1.23 times more volatile than Mullen Group. It trades about 0.16 of its potential returns per unit of risk. Mullen Group is currently generating about -0.13 per unit of risk. If you would invest  523.00  in Amotiv Limited on December 22, 2024 and sell it today you would earn a total of  95.00  from holding Amotiv Limited or generate 18.16% return on investment over 90 days.

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

Amotiv Limited  vs.  Mullen Group

Amotiv Limited

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amotiv Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Amotiv displayed solid returns over the last few months and may actually be approaching a breakup point.

Mullen Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mullen Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Amotiv and Mullen

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

The idea behind Amotiv Limited and Mullen Group 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.