Correlation Between MST Investment and EVN Finance

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

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

Diversification Opportunities for MST Investment and EVN Finance

-0.79

Correlation Coefficient

MST Investment  EVN Finance

Pay attention - limited upside

The 3 months correlation between MST and EVN is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding MST Investment JSC and EVN Finance JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EVN Finance JSC and MST Investment 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 MST Investment JSC are associated (or correlated) with EVN Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EVN Finance JSC has no effect on the direction of MST Investment i.e., MST Investment and EVN Finance go up and down completely randomly.

Pair Corralation between MST Investment and EVN Finance

Assuming the 90 days trading horizon MST Investment JSC is expected to generate 1.18 times more return on investment than EVN Finance. However, MST Investment is 1.18 times more volatile than EVN Finance JSC. It trades about 0.05 of its potential returns per unit of risk. EVN Finance JSC is currently generating about 0.03 per unit of risk. If you would invest  390,910  in MST Investment JSC on October 11, 2024 and sell it today you would earn a total of  289,090  from holding MST Investment JSC or generate 73.95% return on investment over 90 days.

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

MST Investment JSC  vs.  EVN Finance JSC

MST Investment JSC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MST Investment JSC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MST Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

EVN Finance JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days EVN Finance JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MST Investment and EVN Finance

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

The idea behind MST Investment JSC and EVN Finance JSC 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.