Correlation Between MTI Investment and Nitro Games
Can any of the company-specific risk be diversified away by investing in both MTI Investment and Nitro Games 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 Nitro Games 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 Nitro Games Oyj, you can compare the effects of market volatilities on MTI Investment and Nitro Games 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 Nitro Games. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Investment and Nitro Games.
Diversification Opportunities for MTI Investment and Nitro Games
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MTI and Nitro is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding MTI Investment SE and Nitro Games Oyj in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitro Games Oyj 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 Nitro Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitro Games Oyj has no effect on the direction of MTI Investment i.e., MTI Investment and Nitro Games go up and down completely randomly.
Pair Corralation between MTI Investment and Nitro Games
Assuming the 90 days trading horizon MTI Investment SE is expected to under-perform the Nitro Games. But the stock apears to be less risky and, when comparing its historical volatility, MTI Investment SE is 1.53 times less risky than Nitro Games. The stock trades about -0.71 of its potential returns per unit of risk. The Nitro Games Oyj is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Nitro Games Oyj on October 25, 2024 and sell it today you would earn a total of 26.00 from holding Nitro Games Oyj or generate 11.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MTI Investment SE vs. Nitro Games Oyj
Performance |
| Timeline |
| MTI Investment SE |
| Nitro Games Oyj |
MTI Investment and Nitro Games Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MTI Investment and Nitro Games
The main advantage of trading using opposite MTI Investment and Nitro Games positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTI Investment position performs unexpectedly, Nitro Games 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 Nitro Games will offset losses from the drop in Nitro Games' long position.The idea behind MTI Investment SE and Nitro Games Oyj 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.| Nitro Games vs. Stillfront Group AB | Nitro Games vs. G5 Entertainment publ | Nitro Games vs. Enad Global 7 | Nitro Games vs. Starbreeze AB |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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