Correlation Between MULTI TREX and UNION HOMES

Can any of the company-specific risk be diversified away by investing in both MULTI TREX and UNION HOMES 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 TREX and UNION HOMES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MULTI TREX INTEGRATED FOODS and UNION HOMES REAL, you can compare the effects of market volatilities on MULTI TREX and UNION HOMES 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 TREX with a short position of UNION HOMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI TREX and UNION HOMES.

Diversification Opportunities for MULTI TREX and UNION HOMES

1.0

Correlation Coefficient

MULTI TREX  UNION HOMES

No risk reduction

The 3 months correlation between MULTI and UNION is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding MULTI TREX INTEGRATED FOODS and UNION HOMES REAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNION HOMES REAL and MULTI TREX 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 TREX INTEGRATED FOODS are associated (or correlated) with UNION HOMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNION HOMES REAL has no effect on the direction of MULTI TREX i.e., MULTI TREX and UNION HOMES go up and down completely randomly.

Pair Corralation between MULTI TREX and UNION HOMES

If you would invest  3,660  in UNION HOMES REAL on October 25, 2024 and sell it today you would earn a total of  0.00  from holding UNION HOMES REAL or generate 0.0% return on investment over 90 days.

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

MULTI TREX INTEGRATED FOODS  vs.  UNION HOMES REAL

MULTI TREX INTEGRATED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MULTI TREX INTEGRATED FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, MULTI TREX is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

UNION HOMES REAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNION HOMES REAL has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, UNION HOMES is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with MULTI TREX and UNION HOMES

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

The idea behind MULTI TREX INTEGRATED FOODS and UNION HOMES REAL 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.