Correlation Between Bharti Airtel and Mtar Technologies

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

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

Diversification Opportunities for Bharti Airtel and Mtar Technologies

-0.28

Correlation Coefficient

Bharti Airtel  Mtar Technologies

Very good diversification

The 3 months correlation between Bharti and Mtar is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Bharti Airtel 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 Bharti Airtel 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 Bharti Airtel 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 Bharti Airtel i.e., Bharti Airtel and Mtar Technologies go up and down completely randomly.

Pair Corralation between Bharti Airtel and Mtar Technologies

Assuming the 90 days trading horizon Bharti Airtel Limited is expected to under-perform the Mtar Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Bharti Airtel Limited is 1.95 times less risky than Mtar Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Mtar Technologies Limited is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  151,745  in Mtar Technologies Limited on October 26, 2024 and sell it today you would earn a total of  10,525  from holding Mtar Technologies Limited or generate 6.94% return on investment over 90 days.

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

Bharti Airtel Limited  vs.  Mtar Technologies Limited

Bharti Airtel Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bharti Airtel Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bharti Airtel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mtar Technologies

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mtar Technologies Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Mtar Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Bharti Airtel and Mtar Technologies

The main advantage of trading using opposite Bharti Airtel and Mtar Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bharti Airtel 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 Bharti Airtel 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.