Correlation Between Telecoms Informatics and MB Securities

Can any of the company-specific risk be diversified away by investing in both Telecoms Informatics and MB Securities 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 Telecoms Informatics and MB Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Telecoms Informatics JSC and MB Securities JSC, you can compare the effects of market volatilities on Telecoms Informatics and MB Securities 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 Telecoms Informatics with a short position of MB Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telecoms Informatics and MB Securities.

Diversification Opportunities for Telecoms Informatics and MB Securities

-0.46

Correlation Coefficient

Telecoms Informatics  MB Securities

Very good diversification

The 3 months correlation between Telecoms and MBS is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Telecoms Informatics JSC and MB Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MB Securities JSC and Telecoms Informatics 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 Telecoms Informatics JSC are associated (or correlated) with MB Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MB Securities JSC has no effect on the direction of Telecoms Informatics i.e., Telecoms Informatics and MB Securities go up and down completely randomly.

Pair Corralation between Telecoms Informatics and MB Securities

Assuming the 90 days trading horizon Telecoms Informatics JSC is expected to generate 1.14 times more return on investment than MB Securities. However, Telecoms Informatics is 1.14 times more volatile than MB Securities JSC. It trades about 0.13 of its potential returns per unit of risk. MB Securities JSC is currently generating about -0.06 per unit of risk. If you would invest  1,180,000  in Telecoms Informatics JSC on September 28, 2024 and sell it today you would earn a total of  225,000  from holding Telecoms Informatics JSC or generate 19.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Telecoms Informatics JSC  vs.  MB Securities JSC

Telecoms Informatics JSC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telecoms Informatics JSC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Telecoms Informatics displayed solid returns over the last few months and may actually be approaching a breakup point.

MB Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MB Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Telecoms Informatics and MB Securities

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

The idea behind Telecoms Informatics JSC and MB Securities JSC 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.