Correlation Between Mtar Technologies and Aban Offshore

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

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

Diversification Opportunities for Mtar Technologies and Aban Offshore

0.34

Correlation Coefficient

Mtar Technologies  Aban Offshore

Weak diversification

The 3 months correlation between Mtar and Aban is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Mtar Technologies Limited and Aban Offshore Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aban Offshore Limited and Mtar Technologies 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 Mtar Technologies Limited are associated (or correlated) with Aban Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aban Offshore Limited has no effect on the direction of Mtar Technologies i.e., Mtar Technologies and Aban Offshore go up and down completely randomly.

Pair Corralation between Mtar Technologies and Aban Offshore

Assuming the 90 days trading horizon Mtar Technologies Limited is expected to under-perform the Aban Offshore. In addition to that, Mtar Technologies is 1.06 times more volatile than Aban Offshore Limited. It trades about -0.02 of its total potential returns per unit of risk. Aban Offshore Limited is currently generating about 0.11 per unit of volatility. If you would invest  6,214  in Aban Offshore Limited on September 23, 2024 and sell it today you would earn a total of  269.00  from holding Aban Offshore Limited or generate 4.33% return on investment over 90 days.

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

Mtar Technologies Limited  vs.  Aban Offshore Limited

Mtar Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mtar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Mtar Technologies is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Aban Offshore Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aban Offshore Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mtar Technologies and Aban Offshore

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

The idea behind Mtar Technologies Limited and Aban Offshore Limited 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.