Correlation Between Mistras and Supercom

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

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

Diversification Opportunities for Mistras and Supercom

0.23

Correlation Coefficient

Mistras  Supercom

Modest diversification

The 3 months correlation between Mistras and Supercom is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Mistras Group and Supercom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Supercom and Mistras 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 Mistras Group are associated (or correlated) with Supercom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Supercom has no effect on the direction of Mistras i.e., Mistras and Supercom go up and down completely randomly.

Pair Corralation between Mistras and Supercom

Allowing for the 90-day total investment horizon Mistras Group is expected to generate 0.57 times more return on investment than Supercom. However, Mistras Group is 1.77 times less risky than Supercom. It trades about 0.01 of its potential returns per unit of risk. Supercom is currently generating about -0.01 per unit of risk. If you would invest  894.00  in Mistras Group on September 24, 2024 and sell it today you would lose (6.00) from holding Mistras Group or give up 0.67% of portfolio value over 90 days.

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

Mistras Group  vs.  Supercom

Mistras Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mistras Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Supercom

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mistras and Supercom

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

The idea behind Mistras Group and Supercom 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.