Correlation Between Central Asia and MT Bank
Can any of the company-specific risk be diversified away by investing in both Central Asia and MT Bank 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 Central Asia and MT Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Central Asia Metals and MT Bank Corp, you can compare the effects of market volatilities on Central Asia and MT Bank 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 Central Asia with a short position of MT Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Central Asia and MT Bank.
Diversification Opportunities for Central Asia and MT Bank
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Central and 0JW2 is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Central Asia Metals and MT Bank Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT Bank Corp and Central Asia 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 Central Asia Metals are associated (or correlated) with MT Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT Bank Corp has no effect on the direction of Central Asia i.e., Central Asia and MT Bank go up and down completely randomly.
Pair Corralation between Central Asia and MT Bank
Assuming the 90 days trading horizon Central Asia Metals is expected to under-perform the MT Bank. But the stock apears to be less risky and, when comparing its historical volatility, Central Asia Metals is 1.32 times less risky than MT Bank. The stock trades about -0.04 of its potential returns per unit of risk. The MT Bank Corp is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 16,391 in MT Bank Corp on September 12, 2024 and sell it today you would earn a total of 3,972 from holding MT Bank Corp or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Central Asia Metals vs. MT Bank Corp
Performance |
| Timeline |
| Central Asia Metals |
| MT Bank Corp |
Central Asia and MT Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Central Asia and MT Bank
The main advantage of trading using opposite Central Asia and MT Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Central Asia position performs unexpectedly, MT Bank 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 MT Bank will offset losses from the drop in MT Bank's long position.| Central Asia vs. Ashtead Technology Holdings | Central Asia vs. L3Harris Technologies | Central Asia vs. Roper Technologies | Central Asia vs. Alliance Data Systems |
| MT Bank vs. Air Products Chemicals | MT Bank vs. Park Hotels Resorts | MT Bank vs. Roper Technologies | MT Bank vs. Melia Hotels |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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