Correlation Between Mytilineos and Alumil Aluminium

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

By analyzing existing cross correlation between Mytilineos SA and Alumil Aluminium Industry, you can compare the effects of market volatilities on Mytilineos and Alumil Aluminium 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 Mytilineos with a short position of Alumil Aluminium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mytilineos and Alumil Aluminium.

Diversification Opportunities for Mytilineos and Alumil Aluminium

0.32

Correlation Coefficient

Mytilineos  Alumil Aluminium

Weak diversification

The 3 months correlation between Mytilineos and Alumil is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Mytilineos SA and Alumil Aluminium Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alumil Aluminium Industry and Mytilineos 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 Mytilineos SA are associated (or correlated) with Alumil Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alumil Aluminium Industry has no effect on the direction of Mytilineos i.e., Mytilineos and Alumil Aluminium go up and down completely randomly.

Pair Corralation between Mytilineos and Alumil Aluminium

Assuming the 90 days trading horizon Mytilineos SA is expected to generate 0.67 times more return on investment than Alumil Aluminium. However, Mytilineos SA is 1.48 times less risky than Alumil Aluminium. It trades about 0.19 of its potential returns per unit of risk. Alumil Aluminium Industry is currently generating about 0.13 per unit of risk. If you would invest  3,126  in Mytilineos SA on November 27, 2024 and sell it today you would earn a total of  536.00  from holding Mytilineos SA or generate 17.15% return on investment over 90 days.

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

Mytilineos SA  vs.  Alumil Aluminium Industry

Mytilineos SA

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mytilineos SA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Mytilineos sustained solid returns over the last few months and may actually be approaching a breakup point.

Alumil Aluminium Industry

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alumil Aluminium Industry are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Alumil Aluminium unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mytilineos and Alumil Aluminium

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

The idea behind Mytilineos SA and Alumil Aluminium Industry 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .