Correlation Between MTL and POCC

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Can any of the company-specific risk be diversified away by investing in both MTL and POCC 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 MTL and POCC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MTL and POCC, you can compare the effects of market volatilities on MTL and POCC 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 MTL with a short position of POCC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTL and POCC.

Diversification Opportunities for MTL and POCC

MTLPOCCDiversified AwayMTLPOCCDiversified Away100%
0.84
  Correlation Coefficient

Very poor diversification

The 3 months correlation between MTL and POCC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MTL and POCC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POCC and MTL 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 MTL are associated (or correlated) with POCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POCC has no effect on the direction of MTL i.e., MTL and POCC go up and down completely randomly.

Pair Corralation between MTL and POCC

Assuming the 90 days trading horizon MTL is expected to generate 1.29 times more return on investment than POCC. However, MTL is 1.29 times more volatile than POCC. It trades about -0.12 of its potential returns per unit of risk. POCC is currently generating about -0.22 per unit of risk. If you would invest  115.00  in MTL on November 23, 2024 and sell it today you would lose (17.00) from holding MTL or give up 14.78% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

MTL  vs.  POCC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-100102030
JavaScript chart by amCharts 3.21.15MTL POCC
       Timeline  
MTL 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days MTL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's essential indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for MTL shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.21.41.61.8
POCC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days POCC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for POCC shareholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.00010.000120.000140.000160.000180.0002

MTL and POCC Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.45-7.82-5.2-2.58-0.04372.535.117.6810.25 0.0100.0150.0200.025
JavaScript chart by amCharts 3.21.15MTL POCC
       Returns  

Pair Trading with MTL and POCC

The main advantage of trading using opposite MTL and POCC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MTL position performs unexpectedly, POCC 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 POCC will offset losses from the drop in POCC's long position.
The idea behind MTL and POCC 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.
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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 Stocks Directory module to find actively traded stocks across global markets.

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