Correlation Between Mader Group and Cintas

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

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

Diversification Opportunities for Mader Group and Cintas

0.07

Correlation Coefficient

Mader Group  Cintas

Significant diversification

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

Pair Corralation between Mader Group and Cintas

Assuming the 90 days horizon Mader Group Limited is expected to generate 0.78 times more return on investment than Cintas. However, Mader Group Limited is 1.28 times less risky than Cintas. It trades about 0.13 of its potential returns per unit of risk. Cintas is currently generating about -0.05 per unit of risk. If you would invest  357.00  in Mader Group Limited on December 4, 2024 and sell it today you would earn a total of  43.00  from holding Mader Group Limited or generate 12.04% return on investment over 90 days.

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

Mader Group Limited  vs.  Cintas

Mader Group Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mader Group Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, Mader Group reported solid returns over the last few months and may actually be approaching a breakup point.

Cintas

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cintas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mader Group and Cintas

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

The idea behind Mader Group Limited and Cintas 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.