Correlation Between Innovative Technology and MST Investment

Can any of the company-specific risk be diversified away by investing in both Innovative Technology and MST Investment 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 Innovative Technology and MST Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Innovative Technology Development and MST Investment JSC, you can compare the effects of market volatilities on Innovative Technology and MST Investment 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 Innovative Technology with a short position of MST Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Technology and MST Investment.

Diversification Opportunities for Innovative Technology and MST Investment

0.1

Correlation Coefficient

Innovative Technology  MST Investment

Average diversification

The 3 months correlation between Innovative and MST is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Technology Developm and MST Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MST Investment JSC and Innovative Technology 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 Innovative Technology Development are associated (or correlated) with MST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MST Investment JSC has no effect on the direction of Innovative Technology i.e., Innovative Technology and MST Investment go up and down completely randomly.

Pair Corralation between Innovative Technology and MST Investment

Assuming the 90 days trading horizon Innovative Technology is expected to generate 2.76 times less return on investment than MST Investment. But when comparing it to its historical volatility, Innovative Technology Development is 1.4 times less risky than MST Investment. It trades about 0.07 of its potential returns per unit of risk. MST Investment JSC is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  550,000  in MST Investment JSC on September 30, 2024 and sell it today you would earn a total of  140,000  from holding MST Investment JSC or generate 25.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Innovative Technology Developm  vs.  MST Investment JSC

Innovative Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Innovative Technology Development are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Innovative Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

MST Investment JSC

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MST Investment JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MST Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Innovative Technology and MST Investment

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

The idea behind Innovative Technology Development and MST Investment 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.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.