Correlation Between Multilaser Industrial and Western Digital

Can any of the company-specific risk be diversified away by investing in both Multilaser Industrial and Western Digital 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 Multilaser Industrial and Western Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Multilaser Industrial and Western Digital

0.08

Correlation Coefficient

Multilaser Industrial  Western Digital

Significant diversification

The 3 months correlation between Multilaser and Western is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Multilaser Industrial SA and Western Digital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Digital and Multilaser Industrial 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 Multilaser Industrial SA are associated (or correlated) with Western Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Digital has no effect on the direction of Multilaser Industrial i.e., Multilaser Industrial and Western Digital go up and down completely randomly.

Pair Corralation between Multilaser Industrial and Western Digital

Assuming the 90 days trading horizon Multilaser Industrial SA is expected to generate 0.73 times more return on investment than Western Digital. However, Multilaser Industrial SA is 1.36 times less risky than Western Digital. It trades about 0.11 of its potential returns per unit of risk. Western Digital is currently generating about -0.14 per unit of risk. If you would invest  106.00  in Multilaser Industrial SA on December 27, 2024 and sell it today you would earn a total of  21.00  from holding Multilaser Industrial SA or generate 19.81% return on investment over 90 days.

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

Multilaser Industrial SA  vs.  Western Digital

Multilaser Industrial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multilaser Industrial SA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Multilaser Industrial unveiled solid returns over the last few months and may actually be approaching a breakup point.

Western Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Western Digital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Multilaser Industrial and Western Digital

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

The idea behind Multilaser Industrial SA and Western Digital 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.