Correlation Between Induction Healthcare and Mulberry Group

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

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

Diversification Opportunities for Induction Healthcare and Mulberry Group

-0.73

Correlation Coefficient

Induction Healthcare  Mulberry Group

Pay attention - limited upside

The 3 months correlation between Induction and Mulberry is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Induction Healthcare Group and Mulberry Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mulberry Group PLC and Induction Healthcare 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 Induction Healthcare Group are associated (or correlated) with Mulberry Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mulberry Group PLC has no effect on the direction of Induction Healthcare i.e., Induction Healthcare and Mulberry Group go up and down completely randomly.

Pair Corralation between Induction Healthcare and Mulberry Group

Assuming the 90 days trading horizon Induction Healthcare Group is expected to under-perform the Mulberry Group. But the stock apears to be less risky and, when comparing its historical volatility, Induction Healthcare Group is 3.09 times less risky than Mulberry Group. The stock trades about -0.29 of its potential returns per unit of risk. The Mulberry Group PLC is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  10,750  in Mulberry Group PLC on September 13, 2024 and sell it today you would lose (750.00) from holding Mulberry Group PLC or give up 6.98% of portfolio value over 90 days.

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

Induction Healthcare Group  vs.  Mulberry Group PLC

Induction Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Induction Healthcare Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Induction Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.

Mulberry Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mulberry Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mulberry Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Induction Healthcare and Mulberry Group

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

The idea behind Induction Healthcare Group and Mulberry Group PLC 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.