Correlation Between Mtar Technologies and Sandhar Technologies

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

By analyzing existing cross correlation between Mtar Technologies Limited and Sandhar Technologies Limited, you can compare the effects of market volatilities on Mtar Technologies and Sandhar Technologies 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 Mtar Technologies with a short position of Sandhar Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mtar Technologies and Sandhar Technologies.

Diversification Opportunities for Mtar Technologies and Sandhar Technologies

0.6

Correlation Coefficient

Mtar Technologies  Sandhar Technologies

Poor diversification

The 3 months correlation between Mtar and Sandhar is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mtar Technologies Limited and Sandhar Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sandhar Technologies and Mtar Technologies 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 Mtar Technologies Limited are associated (or correlated) with Sandhar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sandhar Technologies has no effect on the direction of Mtar Technologies i.e., Mtar Technologies and Sandhar Technologies go up and down completely randomly.

Pair Corralation between Mtar Technologies and Sandhar Technologies

Assuming the 90 days trading horizon Mtar Technologies Limited is expected to under-perform the Sandhar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Mtar Technologies Limited is 1.1 times less risky than Sandhar Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Sandhar Technologies Limited is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  35,632  in Sandhar Technologies Limited on September 30, 2024 and sell it today you would earn a total of  16,043  from holding Sandhar Technologies Limited or generate 45.02% return on investment over 90 days.

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

Mtar Technologies Limited  vs.  Sandhar Technologies Limited

Mtar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mtar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mtar Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Sandhar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sandhar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Sandhar Technologies is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Mtar Technologies and Sandhar Technologies

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

The idea behind Mtar Technologies Limited and Sandhar Technologies Limited 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.