Correlation Between Martin Currie and Democracy International

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

By analyzing existing cross correlation between Martin Currie Sustainable and Democracy International, you can compare the effects of market volatilities on Martin Currie and Democracy International 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 Martin Currie with a short position of Democracy International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Currie and Democracy International.

Diversification Opportunities for Martin Currie and Democracy International

0.86

Correlation Coefficient

Martin Currie  Democracy International

Very poor diversification

The 3 months correlation between Martin and Democracy is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Martin Currie Sustainable and Democracy International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Democracy International and Martin Currie 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 Martin Currie Sustainable are associated (or correlated) with Democracy International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Democracy International has no effect on the direction of Martin Currie i.e., Martin Currie and Democracy International go up and down completely randomly.

Pair Corralation between Martin Currie and Democracy International

Given the investment horizon of 90 days Martin Currie is expected to generate 1.62 times less return on investment than Democracy International. In addition to that, Martin Currie is 1.49 times more volatile than Democracy International. It trades about 0.06 of its total potential returns per unit of risk. Democracy International is currently generating about 0.14 per unit of volatility. If you would invest  2,484  in Democracy International on December 22, 2024 and sell it today you would earn a total of  177.00  from holding Democracy International or generate 7.13% return on investment over 90 days.

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

Martin Currie Sustainable  vs.  Democracy International

Martin Currie Sustainable

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Currie Sustainable are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Martin Currie is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Democracy International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Democracy International are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Democracy International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Martin Currie and Democracy International

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

The idea behind Martin Currie Sustainable and Democracy International 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 CEOs Directory module to screen CEOs from public companies around the world.