Correlation Between Memscap Regpt and SQLI SA

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

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

Diversification Opportunities for Memscap Regpt and SQLI SA

0.51

Correlation Coefficient

Memscap Regpt  SQLI SA

Very weak diversification

The 3 months correlation between Memscap and SQLI is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Memscap Regpt and SQLI SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SQLI SA and Memscap Regpt 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 Memscap Regpt are associated (or correlated) with SQLI SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SQLI SA has no effect on the direction of Memscap Regpt i.e., Memscap Regpt and SQLI SA go up and down completely randomly.

Pair Corralation between Memscap Regpt and SQLI SA

Assuming the 90 days trading horizon Memscap Regpt is expected to generate 1.73 times more return on investment than SQLI SA. However, Memscap Regpt is 1.73 times more volatile than SQLI SA. It trades about 0.08 of its potential returns per unit of risk. SQLI SA is currently generating about 0.03 per unit of risk. If you would invest  146.00  in Memscap Regpt on October 15, 2024 and sell it today you would earn a total of  324.00  from holding Memscap Regpt or generate 221.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.43%
Values	Daily Returns

Memscap Regpt  vs.  SQLI SA

Memscap Regpt

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Memscap Regpt are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Memscap Regpt sustained solid returns over the last few months and may actually be approaching a breakup point.

SQLI SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SQLI SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, SQLI SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Memscap Regpt and SQLI SA

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

The idea behind Memscap Regpt and SQLI SA 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.