Correlation Between MULTI TREX and NIGERIA ENERGY

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Can any of the company-specific risk be diversified away by investing in both MULTI TREX and NIGERIA ENERGY 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 NIGERIA ENERGY 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 NIGERIA ENERGY SECTOR, you can compare the effects of market volatilities on MULTI TREX and NIGERIA ENERGY 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 NIGERIA ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI TREX and NIGERIA ENERGY.

Diversification Opportunities for MULTI TREX and NIGERIA ENERGY

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between MULTI and NIGERIA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MULTI TREX INTEGRATED FOODS and NIGERIA ENERGY SECTOR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIGERIA ENERGY SECTOR 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 NIGERIA ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIGERIA ENERGY SECTOR has no effect on the direction of MULTI TREX i.e., MULTI TREX and NIGERIA ENERGY go up and down completely randomly.

Pair Corralation between MULTI TREX and NIGERIA ENERGY

If you would invest (100.00) in NIGERIA ENERGY SECTOR on September 19, 2024 and sell it today you would earn a total of  100.00  from holding NIGERIA ENERGY SECTOR or generate -100.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

MULTI TREX INTEGRATED FOODS  vs.  NIGERIA ENERGY SECTOR

 Performance 
       Timeline  
MULTI TREX INTEGRATED 

Risk-Adjusted Performance

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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.
NIGERIA ENERGY SECTOR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NIGERIA ENERGY SECTOR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NIGERIA ENERGY is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

MULTI TREX and NIGERIA ENERGY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MULTI TREX and NIGERIA ENERGY

The main advantage of trading using opposite MULTI TREX and NIGERIA ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MULTI TREX position performs unexpectedly, NIGERIA ENERGY 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 NIGERIA ENERGY will offset losses from the drop in NIGERIA ENERGY's long position.
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The idea behind MULTI TREX INTEGRATED FOODS and NIGERIA ENERGY SECTOR 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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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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