Correlation Between Multi Retail and C Mer

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

Diversification Opportunities for Multi Retail and C Mer

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Multi and CMER is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Multi Retail Group and C Mer Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Mer Industries 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 C Mer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Mer Industries has no effect on the direction of Multi Retail i.e., Multi Retail and C Mer go up and down completely randomly.

Pair Corralation between Multi Retail and C Mer

Assuming the 90 days trading horizon Multi Retail Group is expected to generate 0.62 times more return on investment than C Mer. However, Multi Retail Group is 1.6 times less risky than C Mer. It trades about 0.02 of its potential returns per unit of risk. C Mer Industries is currently generating about -0.04 per unit of risk. If you would invest  103,300  in Multi Retail Group on September 1, 2024 and sell it today you would earn a total of  600.00  from holding Multi Retail Group or generate 0.58% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Multi Retail Group  vs.  C Mer Industries

 Performance 
       Timeline  
Multi Retail Group 

Risk-Adjusted Performance

26 of 100

 
Weak
 
Strong
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Multi Retail Group are ranked lower than 26 (%) 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.
C Mer Industries 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in C Mer Industries are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, C Mer sustained solid returns over the last few months and may actually be approaching a breakup point.

Multi Retail and C Mer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Multi Retail and C Mer

The main advantage of trading using opposite Multi Retail and C Mer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Retail position performs unexpectedly, C Mer 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 C Mer will offset losses from the drop in C Mer's long position.
The idea behind Multi Retail Group and C Mer Industries 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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