Correlation Between Critic Clothing and Majic Wheels

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

By analyzing existing cross correlation between Critic Clothing and Majic Wheels Corp, you can compare the effects of market volatilities on Critic Clothing and Majic Wheels 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 Critic Clothing with a short position of Majic Wheels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Critic Clothing and Majic Wheels.

Diversification Opportunities for Critic Clothing and Majic Wheels

-0.13

Correlation Coefficient

Critic Clothing  Majic Wheels

Good diversification

The 3 months correlation between Critic and Majic is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Critic Clothing and Majic Wheels Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Majic Wheels Corp and Critic Clothing 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 Critic Clothing are associated (or correlated) with Majic Wheels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Majic Wheels Corp has no effect on the direction of Critic Clothing i.e., Critic Clothing and Majic Wheels go up and down completely randomly.

Pair Corralation between Critic Clothing and Majic Wheels

If you would invest  1.60  in Critic Clothing on December 25, 2024 and sell it today you would earn a total of  1.16  from holding Critic Clothing or generate 72.5% return on investment over 90 days.

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

Critic Clothing  vs.  Majic Wheels Corp

Critic Clothing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Critic Clothing are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Critic Clothing reported solid returns over the last few months and may actually be approaching a breakup point.

Majic Wheels Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Majic Wheels Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Majic Wheels is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Critic Clothing and Majic Wheels

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

The idea behind Critic Clothing and Majic Wheels Corp 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.