Correlation Between Mtar Technologies and General Insurance

Can any of the company-specific risk be diversified away by investing in both Mtar Technologies and General Insurance 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 General Insurance 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 General Insurance, you can compare the effects of market volatilities on Mtar Technologies and General Insurance 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 General Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mtar Technologies and General Insurance.

Diversification Opportunities for Mtar Technologies and General Insurance

0.8

Correlation Coefficient

Mtar Technologies  General Insurance

Very poor diversification

The 3 months correlation between Mtar and General is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mtar Technologies Limited and General Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Insurance 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 General Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Insurance has no effect on the direction of Mtar Technologies i.e., Mtar Technologies and General Insurance go up and down completely randomly.

Pair Corralation between Mtar Technologies and General Insurance

Assuming the 90 days trading horizon Mtar Technologies Limited is expected to under-perform the General Insurance. In addition to that, Mtar Technologies is 1.05 times more volatile than General Insurance. It trades about -0.04 of its total potential returns per unit of risk. General Insurance is currently generating about -0.01 per unit of volatility. If you would invest  46,545  in General Insurance on December 25, 2024 and sell it today you would lose (2,355) from holding General Insurance or give up 5.06% of portfolio value over 90 days.

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

Mtar Technologies Limited  vs.  General Insurance

Mtar Technologies

Risk-Adjusted Performance

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 latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

General Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days General Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, General Insurance is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mtar Technologies and General Insurance

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

The idea behind Mtar Technologies Limited and General Insurance 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..