Correlation Between Elevance Health, and Multilaser Industrial

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

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

Diversification Opportunities for Elevance Health, and Multilaser Industrial

0.52

Correlation Coefficient

Elevance Health,  Multilaser Industrial

Very weak diversification

The 3 months correlation between Elevance and Multilaser is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Elevance Health, and Multilaser Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multilaser Industrial and Elevance Health, 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 Elevance Health, are associated (or correlated) with Multilaser Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multilaser Industrial has no effect on the direction of Elevance Health, i.e., Elevance Health, and Multilaser Industrial go up and down completely randomly.

Pair Corralation between Elevance Health, and Multilaser Industrial

Assuming the 90 days trading horizon Elevance Health, is expected to generate 0.5 times more return on investment than Multilaser Industrial. However, Elevance Health, is 1.99 times less risky than Multilaser Industrial. It trades about 0.0 of its potential returns per unit of risk. Multilaser Industrial SA is currently generating about -0.04 per unit of risk. If you would invest  49,740  in Elevance Health, on October 8, 2024 and sell it today you would lose (2,491) from holding Elevance Health, or give up 5.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.31%
Values	Daily Returns

Elevance Health,  vs.  Multilaser Industrial SA

Elevance Health,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevance Health, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Multilaser Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Multilaser Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Elevance Health, and Multilaser Industrial

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

The idea behind Elevance Health, and Multilaser Industrial 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.