Correlation Between Mantex AB and Terranet

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

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

Diversification Opportunities for Mantex AB and Terranet

0.77

Correlation Coefficient

Mantex AB  Terranet

Poor diversification

The 3 months correlation between Mantex and Terranet is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mantex AB and Terranet AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Terranet AB and Mantex AB 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 Mantex AB are associated (or correlated) with Terranet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Terranet AB has no effect on the direction of Mantex AB i.e., Mantex AB and Terranet go up and down completely randomly.

Pair Corralation between Mantex AB and Terranet

Assuming the 90 days trading horizon Mantex AB is expected to under-perform the Terranet. But the stock apears to be less risky and, when comparing its historical volatility, Mantex AB is 1.42 times less risky than Terranet. The stock trades about -0.11 of its potential returns per unit of risk. The Terranet AB is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  5.89  in Terranet AB on September 23, 2024 and sell it today you would earn a total of  10.11  from holding Terranet AB or generate 171.65% return on investment over 90 days.

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

Mantex AB  vs.  Terranet AB

Mantex AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mantex AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Terranet AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mantex AB and Terranet

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

The idea behind Mantex AB and Terranet AB 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.