Correlation Between Multi Retail and MediPress Health

Can any of the company-specific risk be diversified away by investing in both Multi Retail and MediPress Health 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 Multi Retail and MediPress Health into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Multi Retail Group and MediPress Health Limited Partnership, you can compare the effects of market volatilities on Multi Retail and MediPress Health 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 Multi Retail with a short position of MediPress Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Retail and MediPress Health.

Diversification Opportunities for Multi Retail and MediPress Health

0.29

Correlation Coefficient

Multi Retail  MediPress Health

Modest diversification

The 3 months correlation between Multi and MediPress is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Multi Retail Group and MediPress Health Limited Partn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MediPress Health Lim and Multi Retail 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 Multi Retail Group are associated (or correlated) with MediPress Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MediPress Health Lim has no effect on the direction of Multi Retail i.e., Multi Retail and MediPress Health go up and down completely randomly.

Pair Corralation between Multi Retail and MediPress Health

Assuming the 90 days trading horizon Multi Retail Group is expected to generate 0.98 times more return on investment than MediPress Health. However, Multi Retail Group is 1.02 times less risky than MediPress Health. It trades about 0.21 of its potential returns per unit of risk. MediPress Health Limited Partnership is currently generating about 0.11 per unit of risk. If you would invest  101,300  in Multi Retail Group on October 24, 2024 and sell it today you would earn a total of  28,200  from holding Multi Retail Group or generate 27.84% return on investment over 90 days.

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

Multi Retail Group  vs.  MediPress Health Limited Partn

Multi Retail Group

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Multi Retail sustained solid returns over the last few months and may actually be approaching a breakup point.

MediPress Health Lim

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MediPress Health Limited Partnership are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MediPress Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Retail and MediPress Health

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

The idea behind Multi Retail Group and MediPress Health Limited Partnership 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.