Correlation Between Maat Pharma and SPDR Barclays

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

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

Diversification Opportunities for Maat Pharma and SPDR Barclays

0.33

Correlation Coefficient

Maat Pharma  SPDR Barclays

Weak diversification

The 3 months correlation between Maat and SPDR is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Maat Pharma SA and SPDR Barclays Euro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Barclays Euro and Maat Pharma 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 Maat Pharma SA are associated (or correlated) with SPDR Barclays. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Barclays Euro has no effect on the direction of Maat Pharma i.e., Maat Pharma and SPDR Barclays go up and down completely randomly.

Pair Corralation between Maat Pharma and SPDR Barclays

Assuming the 90 days trading horizon Maat Pharma SA is expected to generate 25.65 times more return on investment than SPDR Barclays. However, Maat Pharma is 25.65 times more volatile than SPDR Barclays Euro. It trades about 0.03 of its potential returns per unit of risk. SPDR Barclays Euro is currently generating about -0.1 per unit of risk. If you would invest  798.00  in Maat Pharma SA on October 27, 2024 and sell it today you would earn a total of  4.00  from holding Maat Pharma SA or generate 0.5% return on investment over 90 days.

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

Maat Pharma SA  vs.  SPDR Barclays Euro

Maat Pharma SA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Maat Pharma SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Maat Pharma may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SPDR Barclays Euro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPDR Barclays Euro has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SPDR Barclays is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Maat Pharma and SPDR Barclays

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

The idea behind Maat Pharma SA and SPDR Barclays Euro 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.