Correlation Between MTI Investment and ShaMaran Petroleum

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

By analyzing existing cross correlation between MTI Investment SE and ShaMaran Petroleum Corp, you can compare the effects of market volatilities on MTI Investment and ShaMaran Petroleum 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 MTI Investment with a short position of ShaMaran Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Investment and ShaMaran Petroleum.

Diversification Opportunities for MTI Investment and ShaMaran Petroleum

-0.72

Correlation Coefficient

MTI Investment  ShaMaran Petroleum

Pay attention - limited upside

The 3 months correlation between MTI and ShaMaran is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding MTI Investment SE and ShaMaran Petroleum Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ShaMaran Petroleum Corp and MTI Investment 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 MTI Investment SE are associated (or correlated) with ShaMaran Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ShaMaran Petroleum Corp has no effect on the direction of MTI Investment i.e., MTI Investment and ShaMaran Petroleum go up and down completely randomly.

Pair Corralation between MTI Investment and ShaMaran Petroleum

Assuming the 90 days trading horizon MTI Investment SE is expected to under-perform the ShaMaran Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, MTI Investment SE is 1.29 times less risky than ShaMaran Petroleum. The stock trades about -0.2 of its potential returns per unit of risk. The ShaMaran Petroleum Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  59.00  in ShaMaran Petroleum Corp on September 12, 2024 and sell it today you would earn a total of  26.00  from holding ShaMaran Petroleum Corp or generate 44.07% return on investment over 90 days.

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

MTI Investment SE  vs.  ShaMaran Petroleum Corp

MTI Investment SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTI Investment SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ShaMaran Petroleum Corp

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ShaMaran Petroleum Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, ShaMaran Petroleum unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTI Investment and ShaMaran Petroleum

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

The idea behind MTI Investment SE and ShaMaran Petroleum Corp 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.