Correlation Between MTN Group and Ecovyst

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

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

Diversification Opportunities for MTN Group and Ecovyst

-0.78

Correlation Coefficient

MTN Group  Ecovyst

Pay attention - limited upside

The 3 months correlation between MTN and Ecovyst is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding MTN Group Limited and Ecovyst in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecovyst and MTN Group 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 MTN Group Limited are associated (or correlated) with Ecovyst. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecovyst has no effect on the direction of MTN Group i.e., MTN Group and Ecovyst go up and down completely randomly.

Pair Corralation between MTN Group and Ecovyst

Assuming the 90 days horizon MTN Group Limited is expected to generate 1.7 times more return on investment than Ecovyst. However, MTN Group is 1.7 times more volatile than Ecovyst. It trades about 0.24 of its potential returns per unit of risk. Ecovyst is currently generating about 0.21 per unit of risk. If you would invest  448.00  in MTN Group Limited on October 25, 2024 and sell it today you would earn a total of  42.00  from holding MTN Group Limited or generate 9.37% return on investment over 90 days.

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

MTN Group Limited  vs.  Ecovyst

MTN Group Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MTN Group Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile 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.

Ecovyst

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ecovyst are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ecovyst unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTN Group and Ecovyst

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

The idea behind MTN Group Limited and Ecovyst 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.