Correlation Between MST Investment and Innovative Technology
Can any of the company-specific risk be diversified away by investing in both MST Investment and Innovative Technology 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 MST Investment and Innovative Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MST Investment JSC and Innovative Technology Development, you can compare the effects of market volatilities on MST Investment and Innovative Technology 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 MST Investment with a short position of Innovative Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of MST Investment and Innovative Technology.
Diversification Opportunities for MST Investment and Innovative Technology
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MST and Innovative is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MST Investment JSC and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology and MST Investment 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 MST Investment JSC are associated (or correlated) with Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of MST Investment i.e., MST Investment and Innovative Technology go up and down completely randomly.
Pair Corralation between MST Investment and Innovative Technology
Assuming the 90 days trading horizon MST Investment JSC is expected to generate 1.27 times more return on investment than Innovative Technology. However, MST Investment is 1.27 times more volatile than Innovative Technology Development. It trades about 0.1 of its potential returns per unit of risk. Innovative Technology Development is currently generating about -0.09 per unit of risk. If you would invest 560,000 in MST Investment JSC on September 2, 2024 and sell it today you would earn a total of 30,000 from holding MST Investment JSC or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
MST Investment JSC vs. Innovative Technology Developm
Performance |
| Timeline |
| MST Investment JSC |
| Innovative Technology |
MST Investment and Innovative Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MST Investment and Innovative Technology
The main advantage of trading using opposite MST Investment and Innovative Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MST Investment position performs unexpectedly, Innovative Technology 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 Innovative Technology will offset losses from the drop in Innovative Technology's long position.| MST Investment vs. FIT INVEST JSC | MST Investment vs. Damsan JSC | MST Investment vs. An Phat Plastic | MST Investment vs. Alphanam ME |
| Innovative Technology vs. Saigon Viendong Technology | Innovative Technology vs. Techcom Vietnam REIT | Innovative Technology vs. Sea Air Freight | Innovative Technology vs. Century Synthetic Fiber |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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