Correlation Between COMSovereign Holding and MTN Group

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

By analyzing existing cross correlation between COMSovereign Holding Corp and MTN Group Ltd, you can compare the effects of market volatilities on COMSovereign Holding and MTN Group 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 COMSovereign Holding with a short position of MTN Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMSovereign Holding and MTN Group.

Diversification Opportunities for COMSovereign Holding and MTN Group

0.24

Correlation Coefficient

COMSovereign Holding  MTN Group

Modest diversification

The 3 months correlation between COMSovereign and MTN is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding COMSovereign Holding Corp and MTN Group Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTN Group and COMSovereign Holding 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 COMSovereign Holding Corp are associated (or correlated) with MTN Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTN Group has no effect on the direction of COMSovereign Holding i.e., COMSovereign Holding and MTN Group go up and down completely randomly.

Pair Corralation between COMSovereign Holding and MTN Group

Given the investment horizon of 90 days COMSovereign Holding Corp is expected to under-perform the MTN Group. In addition to that, COMSovereign Holding is 1.87 times more volatile than MTN Group Ltd. It trades about -0.01 of its total potential returns per unit of risk. MTN Group Ltd is currently generating about -0.01 per unit of volatility. If you would invest  636.00  in MTN Group Ltd on October 5, 2024 and sell it today you would lose (148.00) from holding MTN Group Ltd or give up 23.27% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	20.04%
Values	Daily Returns

COMSovereign Holding Corp  vs.  MTN Group Ltd

COMSovereign Holding Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COMSovereign Holding Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, COMSovereign Holding is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

MTN Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTN Group Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, MTN Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with COMSovereign Holding and MTN Group

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

The idea behind COMSovereign Holding Corp and MTN Group Ltd 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 Valuation module to check real value of public entities based on technical and fundamental data.