Correlation Between MTI WIRELESS and SINGAPORE AIRLINES
Can any of the company-specific risk be diversified away by investing in both MTI WIRELESS and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES 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 SINGAPORE AIRLINES, you can compare the effects of market volatilities on MTI WIRELESS and SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI WIRELESS and SINGAPORE AIRLINES.
Diversification Opportunities for MTI WIRELESS and SINGAPORE AIRLINES
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTI and SINGAPORE is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding MTI WIRELESS EDGE and SINGAPORE AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SINGAPORE AIRLINES 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 SINGAPORE AIRLINES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SINGAPORE AIRLINES has no effect on the direction of MTI WIRELESS i.e., MTI WIRELESS and SINGAPORE AIRLINES go up and down completely randomly.
Pair Corralation between MTI WIRELESS and SINGAPORE AIRLINES
Assuming the 90 days horizon MTI WIRELESS EDGE is expected to generate 4.41 times more return on investment than SINGAPORE AIRLINES. However, MTI WIRELESS is 4.41 times more volatile than SINGAPORE AIRLINES. It trades about 0.02 of its potential returns per unit of risk. SINGAPORE AIRLINES is currently generating about 0.02 per unit of risk. If you would invest 50.00 in MTI WIRELESS EDGE on September 1, 2024 and sell it today you would lose (5.00) from holding MTI WIRELESS EDGE or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI WIRELESS EDGE vs. SINGAPORE AIRLINES
Performance |
| Timeline |
| MTI WIRELESS EDGE |
| SINGAPORE AIRLINES |
MTI WIRELESS and SINGAPORE AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI WIRELESS and SINGAPORE AIRLINES
The main advantage of trading using opposite MTI WIRELESS and SINGAPORE AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI WIRELESS position performs unexpectedly, SINGAPORE AIRLINES 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 SINGAPORE AIRLINES will offset losses from the drop in SINGAPORE AIRLINES's long position.| MTI WIRELESS vs. MGIC INVESTMENT | MTI WIRELESS vs. PennantPark Investment | MTI WIRELESS vs. SEI INVESTMENTS | MTI WIRELESS vs. PennyMac Mortgage Investment |
| SINGAPORE AIRLINES vs. MAGNUM MINING EXP | SINGAPORE AIRLINES vs. FIREWEED METALS P | SINGAPORE AIRLINES vs. Alfa Financial Software | SINGAPORE AIRLINES vs. Coeur Mining |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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