Correlation Between One Software and Multi Retail

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

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

Diversification Opportunities for One Software and Multi Retail

0.46

Correlation Coefficient

One Software  Multi Retail

Very weak diversification

The 3 months correlation between One and Multi is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding One Software Technologies and Multi Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Retail Group and One Software 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 One Software Technologies are associated (or correlated) with Multi Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Retail Group has no effect on the direction of One Software i.e., One Software and Multi Retail go up and down completely randomly.

Pair Corralation between One Software and Multi Retail

Assuming the 90 days trading horizon One Software Technologies is expected to under-perform the Multi Retail. But the stock apears to be less risky and, when comparing its historical volatility, One Software Technologies is 1.15 times less risky than Multi Retail. The stock trades about -0.02 of its potential returns per unit of risk. The Multi Retail Group is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  113,900  in Multi Retail Group on December 21, 2024 and sell it today you would earn a total of  21,700  from holding Multi Retail Group or generate 19.05% return on investment over 90 days.

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

One Software Technologies  vs.  Multi Retail Group

One Software Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days One Software Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, One Software is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multi Retail Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 12 (%) 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.

Pair Trading with One Software and Multi Retail

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

The idea behind One Software Technologies and Multi Retail Group 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.