Correlation Between Multiexport Foods and Schwager

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

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

Diversification Opportunities for Multiexport Foods and Schwager

0.11

Correlation Coefficient

Multiexport Foods  Schwager

Average diversification

The 3 months correlation between Multiexport and Schwager is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Multiexport Foods SA and Schwager in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwager and Multiexport Foods 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 Multiexport Foods SA are associated (or correlated) with Schwager. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwager has no effect on the direction of Multiexport Foods i.e., Multiexport Foods and Schwager go up and down completely randomly.

Pair Corralation between Multiexport Foods and Schwager

Assuming the 90 days trading horizon Multiexport Foods SA is expected to generate 0.92 times more return on investment than Schwager. However, Multiexport Foods SA is 1.09 times less risky than Schwager. It trades about 0.26 of its potential returns per unit of risk. Schwager is currently generating about 0.0 per unit of risk. If you would invest  18,809  in Multiexport Foods SA on September 5, 2024 and sell it today you would earn a total of  1,691  from holding Multiexport Foods SA or generate 8.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Multiexport Foods SA  vs.  Schwager

Multiexport Foods

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Multiexport Foods SA are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Multiexport Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Schwager

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwager has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Schwager is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Multiexport Foods and Schwager

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

The idea behind Multiexport Foods SA and Schwager 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.