Correlation Between Jupiter and MTX

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

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

Diversification Opportunities for Jupiter and MTX

0.88

Correlation Coefficient

Jupiter  MTX

Very poor diversification

The 3 months correlation between Jupiter and MTX is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Jupiter and MTX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTX and Jupiter 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 Jupiter are associated (or correlated) with MTX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTX has no effect on the direction of Jupiter i.e., Jupiter and MTX go up and down completely randomly.

Pair Corralation between Jupiter and MTX

Assuming the 90 days trading horizon Jupiter is expected to generate 1.56 times more return on investment than MTX. However, Jupiter is 1.56 times more volatile than MTX. It trades about 0.17 of its potential returns per unit of risk. MTX is currently generating about 0.25 per unit of risk. If you would invest  73.00  in Jupiter on September 3, 2024 and sell it today you would earn a total of  47.00  from holding Jupiter or generate 64.38% return on investment over 90 days.

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

Jupiter  vs.  MTX

Jupiter

Risk-Adjusted Performance

13 of 100

Good

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

MTX

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in MTX are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, MTX exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jupiter and MTX

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

The idea behind Jupiter and MTX 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.