Correlation Between MTI WIRELESS and New China
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS and New China 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 MTI WIRELESS and New China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI WIRELESS EDGE and New China Life, you can compare the effects of market volatilities on MTI WIRELESS and New China 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 MTI WIRELESS with a short position of New China. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and New China.
Diversification Opportunities for MTI WIRELESS and New China
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MTI and New is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and New China Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New China Life and MTI WIRELESS 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 MTI WIRELESS EDGE are associated (or correlated) with New China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New China Life has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and New China go up and down completely randomly.
Pair Corralation between MTI WIRELESS and New China
Assuming the 90 days horizon MTI WIRELESS is expected to generate 2.18 times less return on investment than New China. But when comparing it to its historical volatility, MTI WIRELESS EDGE is 1.31 times less risky than New China. It trades about 0.07 of its potential returns per unit of risk. New China Life is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 64.00 in New China Life on September 14, 2024 and sell it today you would earn a total of 250.00 from holding New China Life or generate 390.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. New China Life
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| New China Life |
MTI WIRELESS and New China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and New China
The main advantage of trading using opposite MTI WIRELESS and New China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS position performs unexpectedly, New China 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 New China will offset losses from the drop in New China's long position.| MTI WIRELESS vs. SPORTING | MTI WIRELESS vs. BlueScope Steel Limited | MTI WIRELESS vs. ANTA SPORTS PRODUCT | MTI WIRELESS vs. CosmoSteel Holdings Limited |
| New China vs. Treasury Wine Estates | New China vs. WT OFFSHORE | New China vs. RELIANCE STEEL AL | New China vs. MITSUBISHI STEEL MFG |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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