Correlation Between Matas AS and RIAS AS
Can any of the company-specific risk be diversified away by investing in both Matas AS and RIAS AS 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 Matas AS and RIAS AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matas AS and RIAS AS, you can compare the effects of market volatilities on Matas AS and RIAS AS 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 Matas AS with a short position of RIAS AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matas AS and RIAS AS.
Diversification Opportunities for Matas AS and RIAS AS
Very good diversification
The 3 months correlation between Matas and RIAS is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and RIAS AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RIAS AS and Matas AS 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 Matas AS are associated (or correlated) with RIAS AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RIAS AS has no effect on the direction of Matas AS i.e., Matas AS and RIAS AS go up and down completely randomly.
Pair Corralation between Matas AS and RIAS AS
Assuming the 90 days trading horizon Matas AS is expected to generate 0.85 times more return on investment than RIAS AS. However, Matas AS is 1.18 times less risky than RIAS AS. It trades about 0.07 of its potential returns per unit of risk. RIAS AS is currently generating about 0.0 per unit of risk. If you would invest 9,320 in Matas AS on September 1, 2024 and sell it today you would earn a total of 3,180 from holding Matas AS or generate 34.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matas AS vs. RIAS AS
Performance |
| Timeline |
| Matas AS |
| RIAS AS |
Matas AS and RIAS AS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matas AS and RIAS AS
The main advantage of trading using opposite Matas AS and RIAS AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matas AS position performs unexpectedly, RIAS AS 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 RIAS AS will offset losses from the drop in RIAS AS's long position.The idea behind Matas AS and RIAS AS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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