Correlation Between Re Max and Medican Enterprises

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

By analyzing existing cross correlation between Re Max Holding and Medican Enterprises, you can compare the effects of market volatilities on Re Max and Medican Enterprises 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 Re Max with a short position of Medican Enterprises. Check out your portfolio center. Please also check ongoing floating volatility patterns of Re Max and Medican Enterprises.

Diversification Opportunities for Re Max and Medican Enterprises

0.0

Correlation Coefficient

Re Max  Medican Enterprises

Pay attention - limited upside

The 3 months correlation between RMAX and Medican is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Re Max Holding and Medican Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Medican Enterprises and Re Max 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 Re Max Holding are associated (or correlated) with Medican Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Medican Enterprises has no effect on the direction of Re Max i.e., Re Max and Medican Enterprises go up and down completely randomly.

Pair Corralation between Re Max and Medican Enterprises

If you would invest  1,193  in Re Max Holding on September 5, 2024 and sell it today you would earn a total of  128.00  from holding Re Max Holding or generate 10.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

Re Max Holding  vs.  Medican Enterprises

Re Max Holding

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Re Max Holding are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Re Max showed solid returns over the last few months and may actually be approaching a breakup point.

Medican Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Medican Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Medican Enterprises is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Re Max and Medican Enterprises

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

The idea behind Re Max Holding and Medican Enterprises 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.