Correlation Between REINET INVESTMENTS and MTI INVESTMENT

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

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

Diversification Opportunities for REINET INVESTMENTS and MTI INVESTMENT

0.66

Correlation Coefficient

REINET INVESTMENTS  MTI INVESTMENT

Poor diversification

The 3 months correlation between REINET and MTI is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding REINET INVESTMENTS SCA and MTI INVESTMENT SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI INVESTMENT SE and REINET INVESTMENTS 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 REINET INVESTMENTS SCA are associated (or correlated) with MTI INVESTMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI INVESTMENT SE has no effect on the direction of REINET INVESTMENTS i.e., REINET INVESTMENTS and MTI INVESTMENT go up and down completely randomly.

Pair Corralation between REINET INVESTMENTS and MTI INVESTMENT

Assuming the 90 days horizon REINET INVESTMENTS SCA is expected to generate 0.53 times more return on investment than MTI INVESTMENT. However, REINET INVESTMENTS SCA is 1.9 times less risky than MTI INVESTMENT. It trades about -0.01 of its potential returns per unit of risk. MTI INVESTMENT SE is currently generating about -0.06 per unit of risk. If you would invest  2,260  in REINET INVESTMENTS SCA on February 18, 2024 and sell it today you would lose (80.00) from holding REINET INVESTMENTS SCA or give up 3.54% of portfolio value over 90 days.

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

REINET INVESTMENTS SCA  vs.  MTI INVESTMENT SE

REINET INVESTMENTS SCA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days REINET INVESTMENTS SCA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, REINET INVESTMENTS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with REINET INVESTMENTS and MTI INVESTMENT

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

The idea behind REINET INVESTMENTS SCA and MTI INVESTMENT SE 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.