Correlation Between MT Bank and Central Asia

Can any of the company-specific risk be diversified away by investing in both MT Bank and Central Asia 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 MT Bank and Central Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between MT Bank Corp and Central Asia Metals, you can compare the effects of market volatilities on MT Bank and Central Asia 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 MT Bank with a short position of Central Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of MT Bank and Central Asia.

Diversification Opportunities for MT Bank and Central Asia

-0.68

Correlation Coefficient

MT Bank  Central Asia

Excellent diversification

The 3 months correlation between 0JW2 and Central is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank Corp and Central Asia Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Central Asia Metals and MT Bank 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 MT Bank Corp are associated (or correlated) with Central Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Central Asia Metals has no effect on the direction of MT Bank i.e., MT Bank and Central Asia go up and down completely randomly.

Pair Corralation between MT Bank and Central Asia

Assuming the 90 days trading horizon MT Bank Corp is expected to generate 1.21 times more return on investment than Central Asia. However, MT Bank is 1.21 times more volatile than Central Asia Metals. It trades about 0.21 of its potential returns per unit of risk. Central Asia Metals is currently generating about -0.02 per unit of risk. If you would invest  16,826  in MT Bank Corp on September 4, 2024 and sell it today you would earn a total of  4,840  from holding MT Bank Corp or generate 28.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

MT Bank Corp  vs.  Central Asia Metals

MT Bank Corp

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank Corp are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, MT Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Central Asia Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Central Asia Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Central Asia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MT Bank and Central Asia

The main advantage of trading using opposite MT Bank and Central Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MT Bank position performs unexpectedly, Central Asia 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 Central Asia will offset losses from the drop in Central Asia's long position.

The idea behind MT Bank Corp and Central Asia Metals 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.