Correlation Between Innovative Technology and MST Investment
Can any of the company-specific risk be diversified away by investing in both Innovative Technology and MST Investment 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 Innovative Technology and MST Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innovative Technology Development and MST Investment JSC, you can compare the effects of market volatilities on Innovative Technology and MST Investment 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 Innovative Technology with a short position of MST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Technology and MST Investment.
Diversification Opportunities for Innovative Technology and MST Investment
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Innovative and MST is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Technology Developm and MST Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MST Investment JSC and Innovative Technology 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 Innovative Technology Development are associated (or correlated) with MST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MST Investment JSC has no effect on the direction of Innovative Technology i.e., Innovative Technology and MST Investment go up and down completely randomly.
Pair Corralation between Innovative Technology and MST Investment
Assuming the 90 days trading horizon Innovative Technology Development is expected to under-perform the MST Investment. But the stock apears to be less risky and, when comparing its historical volatility, Innovative Technology Development is 1.24 times less risky than MST Investment. The stock trades about -0.13 of its potential returns per unit of risk. The MST Investment JSC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 560,000 in MST Investment JSC on August 31, 2024 and sell it today you would earn a total of 30,000 from holding MST Investment JSC or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Technology Developm vs. MST Investment JSC
Performance |
| Timeline |
| Innovative Technology |
| MST Investment JSC |
Innovative Technology and MST Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Technology and MST Investment
The main advantage of trading using opposite Innovative Technology and MST Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Technology position performs unexpectedly, MST Investment 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 MST Investment will offset losses from the drop in MST Investment's long position.| Innovative Technology vs. FIT INVEST JSC | Innovative Technology vs. Damsan JSC | Innovative Technology vs. An Phat Plastic | Innovative Technology vs. Alphanam ME |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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