Correlation Between MULTI CHEM and FEMALE HEALTH

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

By analyzing existing cross correlation between MULTI CHEM LTD and FEMALE HEALTH, you can compare the effects of market volatilities on MULTI CHEM and FEMALE HEALTH 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 CHEM with a short position of FEMALE HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of MULTI CHEM and FEMALE HEALTH.

Diversification Opportunities for MULTI CHEM and FEMALE HEALTH

0.1

Correlation Coefficient

MULTI CHEM  FEMALE HEALTH

Average diversification

The 3 months correlation between MULTI and FEMALE is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding MULTI CHEM LTD and FEMALE HEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FEMALE HEALTH and MULTI CHEM 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 CHEM LTD are associated (or correlated) with FEMALE HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FEMALE HEALTH has no effect on the direction of MULTI CHEM i.e., MULTI CHEM and FEMALE HEALTH go up and down completely randomly.

Pair Corralation between MULTI CHEM and FEMALE HEALTH

Assuming the 90 days trading horizon MULTI CHEM LTD is expected to generate 1.25 times more return on investment than FEMALE HEALTH. However, MULTI CHEM is 1.25 times more volatile than FEMALE HEALTH. It trades about 0.06 of its potential returns per unit of risk. FEMALE HEALTH is currently generating about 0.02 per unit of risk. If you would invest  189.00  in MULTI CHEM LTD on April 24, 2025 and sell it today you would earn a total of  25.00  from holding MULTI CHEM LTD or generate 13.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

MULTI CHEM LTD  vs.  FEMALE HEALTH

MULTI CHEM LTD

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MULTI CHEM LTD are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MULTI CHEM reported solid returns over the last few months and may actually be approaching a breakup point.

FEMALE HEALTH

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FEMALE HEALTH are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, FEMALE HEALTH is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with MULTI CHEM and FEMALE HEALTH

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

The idea behind MULTI CHEM LTD and FEMALE HEALTH 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.