Correlation Between Mytilineos and Flour Mills

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

By analyzing existing cross correlation between Mytilineos SA and Flour Mills Kepenos, you can compare the effects of market volatilities on Mytilineos and Flour Mills 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 Mytilineos with a short position of Flour Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mytilineos and Flour Mills.

Diversification Opportunities for Mytilineos and Flour Mills

-0.73

Correlation Coefficient

Mytilineos  Flour Mills

Pay attention - limited upside

The 3 months correlation between Mytilineos and Flour is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Mytilineos SA and Flour Mills Kepenos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flour Mills Kepenos and Mytilineos 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 Mytilineos SA are associated (or correlated) with Flour Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flour Mills Kepenos has no effect on the direction of Mytilineos i.e., Mytilineos and Flour Mills go up and down completely randomly.

Pair Corralation between Mytilineos and Flour Mills

Assuming the 90 days trading horizon Mytilineos is expected to generate 146.26 times less return on investment than Flour Mills. But when comparing it to its historical volatility, Mytilineos SA is 2.84 times less risky than Flour Mills. It trades about 0.0 of its potential returns per unit of risk. Flour Mills Kepenos is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  160.00  in Flour Mills Kepenos on September 12, 2024 and sell it today you would earn a total of  62.00  from holding Flour Mills Kepenos or generate 38.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Mytilineos SA  vs.  Flour Mills Kepenos

Mytilineos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mytilineos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mytilineos is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Flour Mills Kepenos

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Flour Mills Kepenos are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Flour Mills sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mytilineos and Flour Mills

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

The idea behind Mytilineos SA and Flour Mills Kepenos 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.