Correlation Between MTI Wireless and XLMedia PLC

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

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

Diversification Opportunities for MTI Wireless and XLMedia PLC

0.0

Correlation Coefficient

MTI Wireless  XLMedia PLC

Pay attention - limited upside

The 3 months correlation between MTI and XLMedia is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding MTI Wireless Edge and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and MTI Wireless 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 Wireless Edge are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of MTI Wireless i.e., MTI Wireless and XLMedia PLC go up and down completely randomly.

Pair Corralation between MTI Wireless and XLMedia PLC

Assuming the 90 days trading horizon MTI Wireless is expected to generate 2.5 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, MTI Wireless Edge is 1.77 times less risky than XLMedia PLC. It trades about 0.06 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,000.00  in XLMedia PLC on August 31, 2024 and sell it today you would earn a total of  185.00  from holding XLMedia PLC or generate 18.5% return on investment over 90 days.

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

MTI Wireless Edge  vs.  XLMedia PLC

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 unsteady technical and fundamental indicators, MTI Wireless may actually be approaching a critical reversion point that can send shares even higher in December 2024.

XLMedia PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, XLMedia PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTI Wireless and XLMedia PLC

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

The idea behind MTI Wireless Edge and XLMedia PLC 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.