Correlation Between ISS AS and Matas AS

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

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

Diversification Opportunities for ISS AS and Matas AS

0.14

Correlation Coefficient

ISS AS  Matas AS

Average diversification

The 3 months correlation between ISS and Matas is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding ISS AS and Matas AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matas AS and ISS AS 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 ISS AS are associated (or correlated) with Matas AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matas AS has no effect on the direction of ISS AS i.e., ISS AS and Matas AS go up and down completely randomly.

Pair Corralation between ISS AS and Matas AS

Assuming the 90 days trading horizon ISS AS is expected to generate 1.44 times more return on investment than Matas AS. However, ISS AS is 1.44 times more volatile than Matas AS. It trades about 0.17 of its potential returns per unit of risk. Matas AS is currently generating about -0.01 per unit of risk. If you would invest  13,130  in ISS AS on December 29, 2024 and sell it today you would earn a total of  2,990  from holding ISS AS or generate 22.77% return on investment over 90 days.

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

ISS AS  vs.  Matas AS

ISS AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ISS AS are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, ISS AS displayed solid returns over the last few months and may actually be approaching a breakup point.

Matas AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matas AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Matas AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ISS AS and Matas AS

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

The idea behind ISS AS and Matas AS 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.