Correlation Between MTR and STRA Hannoversche

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

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

Diversification Opportunities for MTR and STRA Hannoversche

0.12

Correlation Coefficient

MTR  STRA Hannoversche

Average diversification

The 3 months correlation between MTR and STRA is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding MTR Limited and STRA Hannoversche Verkehrsbetr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRA Hannoversche and MTR 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 MTR Limited are associated (or correlated) with STRA Hannoversche. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRA Hannoversche has no effect on the direction of MTR i.e., MTR and STRA Hannoversche go up and down completely randomly.

Pair Corralation between MTR and STRA Hannoversche

Assuming the 90 days horizon MTR Limited is expected to generate 0.66 times more return on investment than STRA Hannoversche. However, MTR Limited is 1.52 times less risky than STRA Hannoversche. It trades about 0.04 of its potential returns per unit of risk. STRA Hannoversche Verkehrsbetriebe is currently generating about 0.0 per unit of risk. If you would invest  223.00  in MTR Limited on September 26, 2024 and sell it today you would earn a total of  107.00  from holding MTR Limited or generate 47.98% return on investment over 90 days.

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

MTR Limited  vs.  STRA Hannoversche Verkehrsbetr

MTR Limited

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MTR Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, MTR is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

STRA Hannoversche

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRA Hannoversche Verkehrsbetriebe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with MTR and STRA Hannoversche

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

The idea behind MTR Limited and STRA Hannoversche Verkehrsbetriebe 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..