Correlation Between Matas AS and Columbus

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

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

Diversification Opportunities for Matas AS and Columbus

0.39

Correlation Coefficient

Matas AS  Columbus

Weak diversification

The 3 months correlation between Matas and Columbus is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Matas AS and Columbus AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus AS and Matas 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 Matas AS are associated (or correlated) with Columbus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus AS has no effect on the direction of Matas AS i.e., Matas AS and Columbus go up and down completely randomly.

Pair Corralation between Matas AS and Columbus

Assuming the 90 days trading horizon Matas AS is expected to under-perform the Columbus. But the stock apears to be less risky and, when comparing its historical volatility, Matas AS is 1.7 times less risky than Columbus. The stock trades about -0.02 of its potential returns per unit of risk. The Columbus AS is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Columbus AS on December 25, 2024 and sell it today you would earn a total of  245.00  from holding Columbus AS or generate 24.02% return on investment over 90 days.

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

Matas AS  vs.  Columbus AS

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.

Columbus AS

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus AS are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Columbus exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Matas AS and Columbus

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

The idea behind Matas AS and Columbus 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.