Correlation Between Land and Multi National

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

By analyzing existing cross correlation between Land and Houses and Multi National Residence, you can compare the effects of market volatilities on Land and Multi National 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 Land with a short position of Multi National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Land and Multi National.

Diversification Opportunities for Land and Multi National

-0.07

Correlation Coefficient

Land  Multi National

Good diversification

The 3 months correlation between Land and Multi is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Land and Houses and Multi National Residence in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi National Residence and Land 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 Land and Houses are associated (or correlated) with Multi National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi National Residence has no effect on the direction of Land i.e., Land and Multi National go up and down completely randomly.

Pair Corralation between Land and Multi National

Assuming the 90 days trading horizon Land and Houses is expected to under-perform the Multi National. But the stock apears to be less risky and, when comparing its historical volatility, Land and Houses is 21.64 times less risky than Multi National. The stock trades about -0.12 of its potential returns per unit of risk. The Multi National Residence is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  217.00  in Multi National Residence on September 5, 2024 and sell it today you would earn a total of  19.00  from holding Multi National Residence or generate 8.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Land and Houses  vs.  Multi National Residence

Land and Houses

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Land and Houses has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Multi National Residence

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi National Residence are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multi National disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Land and Multi National

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

The idea behind Land and Houses and Multi National Residence 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.