Correlation Between First Advantage and Mader Group

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

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

Diversification Opportunities for First Advantage and Mader Group

-0.39

Correlation Coefficient

First Advantage  Mader Group

Very good diversification

The 3 months correlation between First and Mader is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding First Advantage Corp and Mader Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mader Group Limited and First Advantage 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 First Advantage Corp are associated (or correlated) with Mader Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mader Group Limited has no effect on the direction of First Advantage i.e., First Advantage and Mader Group go up and down completely randomly.

Pair Corralation between First Advantage and Mader Group

Allowing for the 90-day total investment horizon First Advantage Corp is expected to generate 0.83 times more return on investment than Mader Group. However, First Advantage Corp is 1.2 times less risky than Mader Group. It trades about 0.02 of its potential returns per unit of risk. Mader Group Limited is currently generating about -0.05 per unit of risk. If you would invest  1,891  in First Advantage Corp on September 2, 2024 and sell it today you would earn a total of  32.00  from holding First Advantage Corp or generate 1.69% return on investment over 90 days.

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

First Advantage Corp  vs.  Mader Group Limited

First Advantage Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in First Advantage Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, First Advantage is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Mader Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mader Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with First Advantage and Mader Group

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

The idea behind First Advantage Corp and Mader Group Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.