Correlation Between Tatry Mountain and MT 1997

Can any of the company-specific risk be diversified away by investing in both Tatry Mountain and MT 1997 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 Tatry Mountain and MT 1997 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tatry Mountain Resorts and MT 1997 AS, you can compare the effects of market volatilities on Tatry Mountain and MT 1997 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 Tatry Mountain with a short position of MT 1997. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tatry Mountain and MT 1997.

Diversification Opportunities for Tatry Mountain and MT 1997

0.46

Correlation Coefficient

Tatry Mountain  MT 1997

Very weak diversification

The 3 months correlation between Tatry and KLIKY is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Tatry Mountain Resorts and MT 1997 AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MT 1997 AS and Tatry Mountain 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 Tatry Mountain Resorts are associated (or correlated) with MT 1997. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MT 1997 AS has no effect on the direction of Tatry Mountain i.e., Tatry Mountain and MT 1997 go up and down completely randomly.

Pair Corralation between Tatry Mountain and MT 1997

Assuming the 90 days trading horizon Tatry Mountain Resorts is expected to generate 1.1 times more return on investment than MT 1997. However, Tatry Mountain is 1.1 times more volatile than MT 1997 AS. It trades about 0.01 of its potential returns per unit of risk. MT 1997 AS is currently generating about -0.09 per unit of risk. If you would invest  50,500  in Tatry Mountain Resorts on September 19, 2024 and sell it today you would earn a total of  500.00  from holding Tatry Mountain Resorts or generate 0.99% return on investment over 90 days.

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

Tatry Mountain Resorts  vs.  MT 1997 AS

Tatry Mountain Resorts

Risk-Adjusted Performance

0 of 100

Very Weak

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

MT 1997 AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MT 1997 AS has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Tatry Mountain and MT 1997

The main advantage of trading using opposite Tatry Mountain and MT 1997 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tatry Mountain position performs unexpectedly, MT 1997 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 MT 1997 will offset losses from the drop in MT 1997's long position.

The idea behind Tatry Mountain Resorts and MT 1997 AS 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.