Correlation Between AAA Technologies and Mtar Technologies

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

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

Diversification Opportunities for AAA Technologies and Mtar Technologies

0.92

Correlation Coefficient

AAA Technologies  Mtar Technologies

Almost no diversification

The 3 months correlation between AAA and Mtar is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding AAA Technologies Limited and Mtar Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mtar Technologies and AAA Technologies 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 AAA Technologies Limited are associated (or correlated) with Mtar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mtar Technologies has no effect on the direction of AAA Technologies i.e., AAA Technologies and Mtar Technologies go up and down completely randomly.

Pair Corralation between AAA Technologies and Mtar Technologies

Assuming the 90 days trading horizon AAA Technologies Limited is expected to under-perform the Mtar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, AAA Technologies Limited is 1.12 times less risky than Mtar Technologies. The stock trades about -0.17 of its potential returns per unit of risk. The Mtar Technologies Limited is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  165,680  in Mtar Technologies Limited on December 29, 2024 and sell it today you would lose (37,565) from holding Mtar Technologies Limited or give up 22.67% of portfolio value over 90 days.

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

AAA Technologies Limited  vs.  Mtar Technologies Limited

AAA Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days AAA Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Mtar Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mtar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AAA Technologies and Mtar Technologies

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

The idea behind AAA Technologies Limited and Mtar Technologies Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.