Correlation Between Malteries Franco and Speed Rabbit

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

By analyzing existing cross correlation between Malteries Franco Belges Socit and Speed Rabbit Pizza, you can compare the effects of market volatilities on Malteries Franco and Speed Rabbit 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 Malteries Franco with a short position of Speed Rabbit. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malteries Franco and Speed Rabbit.

Diversification Opportunities for Malteries Franco and Speed Rabbit

0.77

Correlation Coefficient

Malteries Franco  Speed Rabbit

Poor diversification

The 3 months correlation between Malteries and Speed is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Malteries Franco Belges Socit and Speed Rabbit Pizza in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Speed Rabbit Pizza and Malteries Franco 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 Malteries Franco Belges Socit are associated (or correlated) with Speed Rabbit. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Speed Rabbit Pizza has no effect on the direction of Malteries Franco i.e., Malteries Franco and Speed Rabbit go up and down completely randomly.

Pair Corralation between Malteries Franco and Speed Rabbit

Assuming the 90 days trading horizon Malteries Franco is expected to generate 4.68 times less return on investment than Speed Rabbit. But when comparing it to its historical volatility, Malteries Franco Belges Socit is 4.04 times less risky than Speed Rabbit. It trades about 0.05 of its potential returns per unit of risk. Speed Rabbit Pizza is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  920.00  in Speed Rabbit Pizza on October 12, 2024 and sell it today you would earn a total of  1,540  from holding Speed Rabbit Pizza or generate 167.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.26%
Values	Daily Returns

Malteries Franco Belges Socit  vs.  Speed Rabbit Pizza

Malteries Franco Belges

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Malteries Franco Belges Socit are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malteries Franco sustained solid returns over the last few months and may actually be approaching a breakup point.

Speed Rabbit Pizza

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Speed Rabbit Pizza are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Speed Rabbit reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Malteries Franco and Speed Rabbit

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

The idea behind Malteries Franco Belges Socit and Speed Rabbit Pizza 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.