Correlation Between Creative Media and Multi Retail

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

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

Diversification Opportunities for Creative Media and Multi Retail

-0.88

Correlation Coefficient

Creative Media  Multi Retail

Pay attention - limited upside

The 3 months correlation between Creative and Multi is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Creative Media Community and Multi Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Retail Group and Creative Media 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 Creative Media Community are associated (or correlated) with Multi Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Retail Group has no effect on the direction of Creative Media i.e., Creative Media and Multi Retail go up and down completely randomly.

Pair Corralation between Creative Media and Multi Retail

Assuming the 90 days trading horizon Creative Media Community is expected to generate 7.23 times more return on investment than Multi Retail. However, Creative Media is 7.23 times more volatile than Multi Retail Group. It trades about 0.16 of its potential returns per unit of risk. Multi Retail Group is currently generating about 0.21 per unit of risk. If you would invest  7,600  in Creative Media Community on October 9, 2024 and sell it today you would earn a total of  1,950  from holding Creative Media Community or generate 25.66% return on investment over 90 days.

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

Creative Media Community  vs.  Multi Retail Group

Creative Media Community

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Creative Media Community has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Multi Retail Group

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Multi Retail sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Creative Media and Multi Retail

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

The idea behind Creative Media Community and Multi Retail 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .