Correlation Between MTI Investment and Nexam Chemical

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

By analyzing existing cross correlation between MTI Investment SE and Nexam Chemical Holding, you can compare the effects of market volatilities on MTI Investment and Nexam Chemical 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 MTI Investment with a short position of Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of MTI Investment and Nexam Chemical.

Diversification Opportunities for MTI Investment and Nexam Chemical

0.02

Correlation Coefficient

MTI Investment  Nexam Chemical

Significant diversification

The 3 months correlation between MTI and Nexam is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding MTI Investment SE and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding and MTI 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 MTI Investment SE are associated (or correlated) with Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of MTI Investment i.e., MTI Investment and Nexam Chemical go up and down completely randomly.

Pair Corralation between MTI Investment and Nexam Chemical

Assuming the 90 days trading horizon MTI Investment SE is expected to under-perform the Nexam Chemical. But the stock apears to be less risky and, when comparing its historical volatility, MTI Investment SE is 2.08 times less risky than Nexam Chemical. The stock trades about -0.6 of its potential returns per unit of risk. The Nexam Chemical Holding is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  383.00  in Nexam Chemical Holding on October 20, 2024 and sell it today you would earn a total of  3.00  from holding Nexam Chemical Holding or generate 0.78% return on investment over 90 days.

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

MTI Investment SE  vs.  Nexam Chemical Holding

MTI Investment SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Nexam Chemical Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexam Chemical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nexam Chemical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with MTI Investment and Nexam Chemical

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

The idea behind MTI Investment SE and Nexam Chemical Holding 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.