Correlation Between MTY Food and Adex Mining

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

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

Diversification Opportunities for MTY Food and Adex Mining

0.16

Correlation Coefficient

MTY Food  Adex Mining

Average diversification

The 3 months correlation between MTY and Adex is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding MTY Food Group and Adex Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adex Mining and MTY Food 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 MTY Food Group are associated (or correlated) with Adex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adex Mining has no effect on the direction of MTY Food i.e., MTY Food and Adex Mining go up and down completely randomly.

Pair Corralation between MTY Food and Adex Mining

Assuming the 90 days trading horizon MTY Food is expected to generate 3.52 times less return on investment than Adex Mining. But when comparing it to its historical volatility, MTY Food Group is 9.55 times less risky than Adex Mining. It trades about 0.15 of its potential returns per unit of risk. Adex Mining is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1.00  in Adex Mining on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Adex Mining or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

MTY Food Group  vs.  Adex Mining

MTY Food Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in MTY Food Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, MTY Food displayed solid returns over the last few months and may actually be approaching a breakup point.

Adex Mining

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Adex Mining are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Adex Mining showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MTY Food and Adex Mining

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

The idea behind MTY Food Group and Adex Mining 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.