Correlation Between Public Power and Mytilineos

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

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

Diversification Opportunities for Public Power and Mytilineos

0.29

Correlation Coefficient

Public Power  Mytilineos

Modest diversification

The 3 months correlation between Public and Mytilineos is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Public Power and Mytilineos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos SA and Public Power 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 Public Power are associated (or correlated) with Mytilineos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos SA has no effect on the direction of Public Power i.e., Public Power and Mytilineos go up and down completely randomly.

Pair Corralation between Public Power and Mytilineos

Assuming the 90 days trading horizon Public Power is expected to generate 1.09 times more return on investment than Mytilineos. However, Public Power is 1.09 times more volatile than Mytilineos SA. It trades about 0.07 of its potential returns per unit of risk. Mytilineos SA is currently generating about 0.07 per unit of risk. If you would invest  645.00  in Public Power on September 5, 2024 and sell it today you would earn a total of  518.00  from holding Public Power or generate 80.31% return on investment over 90 days.

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

Public Power  vs.  Mytilineos SA

Public Power

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Public Power has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Public Power is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Public Power and Mytilineos

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

The idea behind Public Power and Mytilineos SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.