Correlation Between MTI Investment and Catella AB
Can any of the company-specific risk be diversified away by investing in both MTI Investment and Catella AB 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 Investment and Catella AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTI Investment SE and Catella AB, you can compare the effects of market volatilities on MTI Investment and Catella AB 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 Investment with a short position of Catella AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Investment and Catella AB.
Diversification Opportunities for MTI Investment and Catella AB
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MTI and Catella is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MTI Investment SE and Catella AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catella AB and MTI 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 MTI Investment SE are associated (or correlated) with Catella AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catella AB has no effect on the direction of MTI Investment i.e., MTI Investment and Catella AB go up and down completely randomly.
Pair Corralation between MTI Investment and Catella AB
Assuming the 90 days trading horizon MTI Investment SE is expected to under-perform the Catella AB. In addition to that, MTI Investment is 2.22 times more volatile than Catella AB. It trades about -0.06 of its total potential returns per unit of risk. Catella AB is currently generating about 0.0 per unit of volatility. If you would invest 2,929 in Catella AB on September 3, 2024 and sell it today you would lose (29.00) from holding Catella AB or give up 0.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI Investment SE vs. Catella AB
Performance |
| Timeline |
| MTI Investment SE |
| Catella AB |
MTI Investment and Catella AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI Investment and Catella AB
The main advantage of trading using opposite MTI Investment and Catella AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI Investment position performs unexpectedly, Catella AB 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 Catella AB will offset losses from the drop in Catella AB's long position.| MTI Investment vs. L E Lundbergfretagen | MTI Investment vs. Industrivarden AB ser | MTI Investment vs. Svenska Handelsbanken AB | MTI Investment vs. Investment AB Latour |
| Catella AB vs. L E Lundbergfretagen | Catella AB vs. Industrivarden AB ser | Catella AB vs. Svenska Handelsbanken AB | Catella AB vs. Investment AB Latour |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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