Correlation Between Aware and MMTEC

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

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

Diversification Opportunities for Aware and MMTEC

0.42

Correlation Coefficient

Aware  MMTEC

Very weak diversification

The 3 months correlation between Aware and MMTEC is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and MMTEC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MMTEC Inc and Aware 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 Aware Inc are associated (or correlated) with MMTEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MMTEC Inc has no effect on the direction of Aware i.e., Aware and MMTEC go up and down completely randomly.

Pair Corralation between Aware and MMTEC

Given the investment horizon of 90 days Aware Inc is expected to generate 0.68 times more return on investment than MMTEC. However, Aware Inc is 1.46 times less risky than MMTEC. It trades about -0.02 of its potential returns per unit of risk. MMTEC Inc is currently generating about -0.1 per unit of risk. If you would invest  202.00  in Aware Inc on October 25, 2024 and sell it today you would lose (31.00) from holding Aware Inc or give up 15.35% of portfolio value over 90 days.

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

Aware Inc  vs.  MMTEC Inc

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

MMTEC Inc

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Aware and MMTEC

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

The idea behind Aware Inc and MMTEC Inc 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.