Correlation Between Sdiptech and MTI Investment

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

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

Diversification Opportunities for Sdiptech and MTI Investment

0.29

Correlation Coefficient

Sdiptech  MTI Investment

Modest diversification

The 3 months correlation between Sdiptech and MTI is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Sdiptech AB and MTI Investment SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MTI Investment SE and Sdiptech 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 Sdiptech AB are associated (or correlated) with MTI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MTI Investment SE has no effect on the direction of Sdiptech i.e., Sdiptech and MTI Investment go up and down completely randomly.

Pair Corralation between Sdiptech and MTI Investment

Assuming the 90 days trading horizon Sdiptech AB is expected to generate 0.31 times more return on investment than MTI Investment. However, Sdiptech AB is 3.25 times less risky than MTI Investment. It trades about 0.05 of its potential returns per unit of risk. MTI Investment SE is currently generating about -0.18 per unit of risk. If you would invest  12,155  in Sdiptech AB on September 15, 2024 and sell it today you would earn a total of  295.00  from holding Sdiptech AB or generate 2.43% return on investment over 90 days.

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

Sdiptech AB  vs.  MTI Investment SE

Sdiptech AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sdiptech AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Sdiptech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

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 January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sdiptech and MTI Investment

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

The idea behind Sdiptech AB and MTI Investment SE 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.