Correlation Between Mena Transport and North East

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

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

Diversification Opportunities for Mena Transport and North East

-0.35

Correlation Coefficient

Mena Transport  North East

Very good diversification

The 3 months correlation between Mena and North is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mena Transport Public and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers and Mena Transport 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 Mena Transport Public are associated (or correlated) with North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of Mena Transport i.e., Mena Transport and North East go up and down completely randomly.

Pair Corralation between Mena Transport and North East

Assuming the 90 days trading horizon Mena Transport Public is expected to under-perform the North East. In addition to that, Mena Transport is 1.48 times more volatile than North East Rubbers. It trades about -0.02 of its total potential returns per unit of risk. North East Rubbers is currently generating about 0.06 per unit of volatility. If you would invest  466.00  in North East Rubbers on December 21, 2024 and sell it today you would earn a total of  28.00  from holding North East Rubbers or generate 6.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Mena Transport Public  vs.  North East Rubbers

Mena Transport Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mena Transport Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Mena Transport is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

North East Rubbers

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in North East Rubbers are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, North East may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Mena Transport and North East

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

The idea behind Mena Transport Public and North East Rubbers 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.