Correlation Between Internet Computer and MTA

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

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

Diversification Opportunities for Internet Computer and MTA

-0.3

Correlation Coefficient

Internet Computer  MTA

Very good diversification

The 3 months correlation between Internet and MTA is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Internet Computer and MTA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTA and Internet Computer 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 Internet Computer are associated (or correlated) with MTA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTA has no effect on the direction of Internet Computer i.e., Internet Computer and MTA go up and down completely randomly.

Pair Corralation between Internet Computer and MTA

Assuming the 90 days trading horizon Internet Computer is expected to generate 1.1 times less return on investment than MTA. But when comparing it to its historical volatility, Internet Computer is 4.16 times less risky than MTA. It trades about 0.48 of its potential returns per unit of risk. MTA is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3.00  in MTA on September 4, 2024 and sell it today you would earn a total of  0.24  from holding MTA or generate 8.0% return on investment over 90 days.

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

Internet Computer  vs.  MTA

Internet Computer

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Internet Computer are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Internet Computer exhibited solid returns over the last few months and may actually be approaching a breakup point.

MTA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MTA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MTA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Internet Computer and MTA

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

The idea behind Internet Computer and MTA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.