Correlation Between Chargeurs and MGI Digital

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

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

Diversification Opportunities for Chargeurs and MGI Digital

-0.05

Correlation Coefficient

Chargeurs  MGI Digital

Good diversification

The 3 months correlation between Chargeurs and MGI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Chargeurs SA and MGI Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MGI Digital and Chargeurs 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 Chargeurs SA are associated (or correlated) with MGI Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MGI Digital has no effect on the direction of Chargeurs i.e., Chargeurs and MGI Digital go up and down completely randomly.

Pair Corralation between Chargeurs and MGI Digital

Assuming the 90 days trading horizon Chargeurs SA is expected to generate 1.11 times more return on investment than MGI Digital. However, Chargeurs is 1.11 times more volatile than MGI Digital. It trades about 0.14 of its potential returns per unit of risk. MGI Digital is currently generating about -0.06 per unit of risk. If you would invest  983.00  in Chargeurs SA on December 30, 2024 and sell it today you would earn a total of  181.00  from holding Chargeurs SA or generate 18.41% return on investment over 90 days.

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

Chargeurs SA  vs.  MGI Digital

Chargeurs SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chargeurs SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Chargeurs sustained solid returns over the last few months and may actually be approaching a breakup point.

MGI Digital

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Chargeurs and MGI Digital

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

The idea behind Chargeurs SA and MGI Digital 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.