Correlation Between Multibax Public and Forth Smart

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

By analyzing existing cross correlation between Multibax Public and Forth Smart Service, you can compare the effects of market volatilities on Multibax Public and Forth Smart 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 Multibax Public with a short position of Forth Smart. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multibax Public and Forth Smart.

Diversification Opportunities for Multibax Public and Forth Smart

-0.52

Correlation Coefficient

Multibax Public  Forth Smart

Excellent diversification

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

Pair Corralation between Multibax Public and Forth Smart

Assuming the 90 days trading horizon Multibax Public is expected to generate 29.0 times more return on investment than Forth Smart. However, Multibax Public is 29.0 times more volatile than Forth Smart Service. It trades about 0.12 of its potential returns per unit of risk. Forth Smart Service is currently generating about 0.1 per unit of risk. If you would invest  0.00  in Multibax Public on September 3, 2024 and sell it today you would earn a total of  198.00  from holding Multibax Public or generate 9.223372036854776E16% return on investment over 90 days.

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

Multibax Public  vs.  Forth Smart Service

Multibax Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multibax Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, Multibax Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Forth Smart Service

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Forth Smart Service are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Forth Smart sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multibax Public and Forth Smart

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

The idea behind Multibax Public and Forth Smart Service 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.