Correlation Between OCBC and MTI WIRELESS
Can any of the company-specific risk be diversified away by investing in both OCBC and MTI WIRELESS 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 OCBC and MTI WIRELESS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OCBC and MTI WIRELESS EDGE, you can compare the effects of market volatilities on OCBC and MTI WIRELESS 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 OCBC with a short position of MTI WIRELESS. Check out your portfolio center. Please also check ongoing floating volatility patterns of OCBC and MTI WIRELESS.
Diversification Opportunities for OCBC and MTI WIRELESS
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between OCBC and MTI is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding OCBC and MTI WIRELESS EDGE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI WIRELESS EDGE and OCBC 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 OCBC are associated (or correlated) with MTI WIRELESS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI WIRELESS EDGE has no effect on the direction of OCBC i.e., OCBC and MTI WIRELESS go up and down completely randomly.
Pair Corralation between OCBC and MTI WIRELESS
Assuming the 90 days trading horizon OCBC is expected to generate 0.45 times more return on investment than MTI WIRELESS. However, OCBC is 2.21 times less risky than MTI WIRELESS. It trades about 0.14 of its potential returns per unit of risk. MTI WIRELESS EDGE is currently generating about 0.01 per unit of risk. If you would invest 940.00 in OCBC on August 30, 2024 and sell it today you would earn a total of 217.00 from holding OCBC or generate 23.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
OCBC vs. MTI WIRELESS EDGE
Performance |
| Timeline |
| OCBC |
| MTI WIRELESS EDGE |
OCBC and MTI WIRELESS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with OCBC and MTI WIRELESS
The main advantage of trading using opposite OCBC and MTI WIRELESS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OCBC position performs unexpectedly, MTI WIRELESS 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 MTI WIRELESS will offset losses from the drop in MTI WIRELESS's long position.| OCBC vs. EPSILON HEALTHCARE LTD | OCBC vs. RYU Apparel | OCBC vs. The Hanover Insurance | OCBC vs. Reinsurance Group of |
| MTI WIRELESS vs. NTG Nordic Transport | MTI WIRELESS vs. Texas Roadhouse | MTI WIRELESS vs. Jacquet Metal Service | MTI WIRELESS vs. Transport International Holdings |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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