Correlation Between MT 1997 and Photon Energy
Can any of the company-specific risk be diversified away by investing in both MT 1997 and Photon Energy 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 MT 1997 and Photon Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MT 1997 AS and Photon Energy NV, you can compare the effects of market volatilities on MT 1997 and Photon Energy 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 MT 1997 with a short position of Photon Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT 1997 and Photon Energy.
Diversification Opportunities for MT 1997 and Photon Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KLIKY and Photon is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MT 1997 AS and Photon Energy NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photon Energy NV and MT 1997 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 MT 1997 AS are associated (or correlated) with Photon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photon Energy NV has no effect on the direction of MT 1997 i.e., MT 1997 and Photon Energy go up and down completely randomly.
Pair Corralation between MT 1997 and Photon Energy
Assuming the 90 days trading horizon MT 1997 is expected to generate 1.84 times less return on investment than Photon Energy. But when comparing it to its historical volatility, MT 1997 AS is 1.21 times less risky than Photon Energy. It trades about 0.22 of its potential returns per unit of risk. Photon Energy NV is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 2,380 in Photon Energy NV on October 23, 2024 and sell it today you would earn a total of 310.00 from holding Photon Energy NV or generate 13.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MT 1997 AS vs. Photon Energy NV
Performance |
| Timeline |
| MT 1997 AS |
| Photon Energy NV |
MT 1997 and Photon Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MT 1997 and Photon Energy
The main advantage of trading using opposite MT 1997 and Photon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT 1997 position performs unexpectedly, Photon Energy 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 Photon Energy will offset losses from the drop in Photon Energy's long position.| MT 1997 vs. JT ARCH INVESTMENTS | MT 1997 vs. Raiffeisen Bank International | MT 1997 vs. UNIQA Insurance Group | MT 1997 vs. Erste Group Bank |
| Photon Energy vs. JT ARCH INVESTMENTS | Photon Energy vs. UNIQA Insurance Group | Photon Energy vs. Raiffeisen Bank International | Photon Energy vs. Moneta Money Bank |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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