Correlation Between Caledonia Mining and MTI Wireless

Can any of the company-specific risk be diversified away by investing in both Caledonia Mining 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 Caledonia Mining and MTI Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caledonia Mining and MTI Wireless Edge, you can compare the effects of market volatilities on Caledonia Mining 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 Caledonia Mining with a short position of MTI Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and MTI Wireless.

Diversification Opportunities for Caledonia Mining and MTI Wireless

0.11

Correlation Coefficient

Caledonia Mining  MTI Wireless

Average diversification

The 3 months correlation between Caledonia and MTI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining 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 Caledonia Mining i.e., Caledonia Mining and MTI Wireless go up and down completely randomly.

Pair Corralation between Caledonia Mining and MTI Wireless

Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the MTI Wireless. In addition to that, Caledonia Mining is 1.17 times more volatile than MTI Wireless Edge. It trades about -0.06 of its total potential returns per unit of risk. MTI Wireless Edge is currently generating about 0.05 per unit of volatility. If you would invest  4,150  in MTI Wireless Edge on September 5, 2024 and sell it today you would earn a total of  250.00  from holding MTI Wireless Edge or generate 6.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Caledonia Mining  vs.  MTI Wireless Edge

Caledonia Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caledonia Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

MTI Wireless Edge

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MTI Wireless Edge are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, MTI Wireless may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Caledonia Mining and MTI Wireless

The main advantage of trading using opposite Caledonia Mining and MTI Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining 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' long position.

The idea behind Caledonia Mining and MTI Wireless Edge 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.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.