Correlation Between Mader Group and Quad Graphics

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

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

Diversification Opportunities for Mader Group and Quad Graphics

0.35

Correlation Coefficient

Mader Group  Quad Graphics

Weak diversification

The 3 months correlation between Mader and Quad is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mader Group Limited and Quad Graphics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quad Graphics and Mader Group 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 Mader Group Limited are associated (or correlated) with Quad Graphics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quad Graphics has no effect on the direction of Mader Group i.e., Mader Group and Quad Graphics go up and down completely randomly.

Pair Corralation between Mader Group and Quad Graphics

Assuming the 90 days horizon Mader Group is expected to generate 2.65 times less return on investment than Quad Graphics. But when comparing it to its historical volatility, Mader Group Limited is 1.19 times less risky than Quad Graphics. It trades about 0.02 of its potential returns per unit of risk. Quad Graphics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  441.00  in Quad Graphics on February 6, 2024 and sell it today you would earn a total of  40.00  from holding Quad Graphics or generate 9.07% return on investment over 90 days.

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

Mader Group Limited  vs.  Quad Graphics

Mader Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mader Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Mader Group is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Quad Graphics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mader Group and Quad Graphics

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

The idea behind Mader Group Limited and Quad Graphics 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.