Correlation Between Interlife General and Mytilineos

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

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

Diversification Opportunities for Interlife General and Mytilineos

0.81

Correlation Coefficient

Interlife General  Mytilineos

Very poor diversification

The 3 months correlation between Interlife and Mytilineos is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Interlife General Insurance and Mytilineos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos SA and Interlife General 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 Interlife General Insurance are associated (or correlated) with Mytilineos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos SA has no effect on the direction of Interlife General i.e., Interlife General and Mytilineos go up and down completely randomly.

Pair Corralation between Interlife General and Mytilineos

Assuming the 90 days trading horizon Interlife General Insurance is expected to generate 1.02 times more return on investment than Mytilineos. However, Interlife General is 1.02 times more volatile than Mytilineos SA. It trades about 0.14 of its potential returns per unit of risk. Mytilineos SA is currently generating about 0.12 per unit of risk. If you would invest  436.00  in Interlife General Insurance on December 2, 2024 and sell it today you would earn a total of  55.00  from holding Interlife General Insurance or generate 12.61% return on investment over 90 days.

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

Interlife General Insurance  vs.  Mytilineos SA

Interlife General

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interlife General Insurance are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Interlife General sustained solid returns over the last few months and may actually be approaching a breakup point.

Mytilineos SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mytilineos SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Mytilineos may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Interlife General and Mytilineos

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

The idea behind Interlife General Insurance and Mytilineos SA 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.