Correlation Between Multi Retail and Orbit Technologies

Can any of the company-specific risk be diversified away by investing in both Multi Retail and Orbit Technologies 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 Orbit Technologies 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 Orbit Technologies, you can compare the effects of market volatilities on Multi Retail and Orbit Technologies 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 Orbit Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Retail and Orbit Technologies.

Diversification Opportunities for Multi Retail and Orbit Technologies

0.87

Correlation Coefficient

Multi Retail  Orbit Technologies

Very poor diversification

The 3 months correlation between Multi and Orbit is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Multi Retail Group and Orbit Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orbit Technologies 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 Orbit Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orbit Technologies has no effect on the direction of Multi Retail i.e., Multi Retail and Orbit Technologies go up and down completely randomly.

Pair Corralation between Multi Retail and Orbit Technologies

Assuming the 90 days trading horizon Multi Retail is expected to generate 1.13 times less return on investment than Orbit Technologies. In addition to that, Multi Retail is 1.41 times more volatile than Orbit Technologies. It trades about 0.23 of its total potential returns per unit of risk. Orbit Technologies is currently generating about 0.37 per unit of volatility. If you would invest  230,529  in Orbit Technologies on October 22, 2024 and sell it today you would earn a total of  84,471  from holding Orbit Technologies or generate 36.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.0%
Values	Daily Returns

Multi Retail Group  vs.  Orbit Technologies

Multi Retail Group

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 18 (%) 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.

Orbit Technologies

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Orbit Technologies are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Orbit Technologies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Multi Retail and Orbit Technologies

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

The idea behind Multi Retail Group and Orbit Technologies 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.