Correlation Between Magic Empire and Armada Mercantile

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

By analyzing existing cross correlation between Magic Empire Global and Armada Mercantile, you can compare the effects of market volatilities on Magic Empire and Armada Mercantile 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 Magic Empire with a short position of Armada Mercantile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magic Empire and Armada Mercantile.

Diversification Opportunities for Magic Empire and Armada Mercantile

-0.04

Correlation Coefficient

Magic Empire  Armada Mercantile

Good diversification

The 3 months correlation between Magic and Armada is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Magic Empire Global and Armada Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armada Mercantile and Magic Empire 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 Magic Empire Global are associated (or correlated) with Armada Mercantile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armada Mercantile has no effect on the direction of Magic Empire i.e., Magic Empire and Armada Mercantile go up and down completely randomly.

Pair Corralation between Magic Empire and Armada Mercantile

Given the investment horizon of 90 days Magic Empire Global is expected to under-perform the Armada Mercantile. But the stock apears to be less risky and, when comparing its historical volatility, Magic Empire Global is 1.98 times less risky than Armada Mercantile. The stock trades about -0.04 of its potential returns per unit of risk. The Armada Mercantile is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Armada Mercantile on December 28, 2024 and sell it today you would lose (7.00) from holding Armada Mercantile or give up 23.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Magic Empire Global  vs.  Armada Mercantile

Magic Empire Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Magic Empire Global 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 technical and fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Armada Mercantile

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Armada Mercantile are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Armada Mercantile reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magic Empire and Armada Mercantile

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

The idea behind Magic Empire Global and Armada Mercantile 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.