Correlation Between MTI WIRELESS and OCBC
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS and OCBC 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 OCBC 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 OCBC, you can compare the effects of market volatilities on MTI WIRELESS and OCBC 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 OCBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and OCBC.
Diversification Opportunities for MTI WIRELESS and OCBC
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MTI and OCBC is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and OCBC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCBC 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 OCBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCBC has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and OCBC go up and down completely randomly.
Pair Corralation between MTI WIRELESS and OCBC
Assuming the 90 days horizon MTI WIRELESS EDGE is expected to under-perform the OCBC. In addition to that, MTI WIRELESS is 1.91 times more volatile than OCBC. It trades about -0.13 of its total potential returns per unit of risk. OCBC is currently generating about 0.29 per unit of volatility. If you would invest 1,061 in OCBC on August 30, 2024 and sell it today you would earn a total of 96.00 from holding OCBC or generate 9.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. OCBC
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| OCBC |
MTI WIRELESS and OCBC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and OCBC
The main advantage of trading using opposite MTI WIRELESS and OCBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS position performs unexpectedly, OCBC 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 OCBC will offset losses from the drop in OCBC's long position.| MTI WIRELESS vs. NTG Nordic Transport | MTI WIRELESS vs. Texas Roadhouse | MTI WIRELESS vs. Jacquet Metal Service | MTI WIRELESS vs. Transport International Holdings |
| OCBC vs. EPSILON HEALTHCARE LTD | OCBC vs. RYU Apparel | OCBC vs. The Hanover Insurance | OCBC vs. Reinsurance Group of |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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