Correlation Between EVN Finance and MST Investment

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

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

Diversification Opportunities for EVN Finance and MST Investment

-0.35

Correlation Coefficient

EVN Finance  MST Investment

Very good diversification

The 3 months correlation between EVN and MST is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding EVN Finance JSC and MST Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MST Investment JSC and EVN Finance 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 EVN Finance JSC are associated (or correlated) with MST Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MST Investment JSC has no effect on the direction of EVN Finance i.e., EVN Finance and MST Investment go up and down completely randomly.

Pair Corralation between EVN Finance and MST Investment

Assuming the 90 days trading horizon EVN Finance JSC is expected to generate 1.08 times more return on investment than MST Investment. However, EVN Finance is 1.08 times more volatile than MST Investment JSC. It trades about 0.05 of its potential returns per unit of risk. MST Investment JSC is currently generating about -0.02 per unit of risk. If you would invest  984,000  in EVN Finance JSC on December 19, 2024 and sell it today you would earn a total of  61,000  from holding EVN Finance JSC or generate 6.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

EVN Finance JSC  vs.  MST Investment JSC

EVN Finance JSC

Risk-Adjusted Performance

Weak

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

MST Investment JSC

Risk-Adjusted Performance

Very Weak

Over the last 90 days MST Investment JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, MST Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with EVN Finance and MST Investment

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

The idea behind EVN Finance JSC and MST Investment JSC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.