Correlation Between Made Tech and River

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

By analyzing existing cross correlation between Made Tech Group and River and Mercantile, you can compare the effects of market volatilities on Made Tech and River 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 Made Tech with a short position of River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Made Tech and River.

Diversification Opportunities for Made Tech and River

0.88

Correlation Coefficient

Made Tech  River

Very poor diversification

The 3 months correlation between Made and River is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Made Tech Group and River and Mercantile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on River and Mercantile and Made Tech 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 Made Tech Group are associated (or correlated) with River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of River and Mercantile has no effect on the direction of Made Tech i.e., Made Tech and River go up and down completely randomly.

Pair Corralation between Made Tech and River

Assuming the 90 days trading horizon Made Tech Group is expected to generate 4.44 times more return on investment than River. However, Made Tech is 4.44 times more volatile than River and Mercantile. It trades about 0.2 of its potential returns per unit of risk. River and Mercantile is currently generating about 0.42 per unit of risk. If you would invest  2,450  in Made Tech Group on April 24, 2025 and sell it today you would earn a total of  1,075  from holding Made Tech Group or generate 43.88% return on investment over 90 days.

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

Made Tech Group  vs.  River and Mercantile

Made Tech Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Made Tech Group are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Made Tech unveiled solid returns over the last few months and may actually be approaching a breakup point.

River and Mercantile

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in River and Mercantile are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, River unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Made Tech and River

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

The idea behind Made Tech Group and River and Mercantile 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.