Correlation Between TransAKT and Mundus

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

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

Diversification Opportunities for TransAKT and Mundus

0.69

Correlation Coefficient

TransAKT  Mundus

Poor diversification

The 3 months correlation between TransAKT and Mundus is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding TransAKT and Mundus Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mundus Group and TransAKT 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 TransAKT are associated (or correlated) with Mundus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mundus Group has no effect on the direction of TransAKT i.e., TransAKT and Mundus go up and down completely randomly.

Pair Corralation between TransAKT and Mundus

Given the investment horizon of 90 days TransAKT is expected to generate 4.31 times more return on investment than Mundus. However, TransAKT is 4.31 times more volatile than Mundus Group. It trades about 0.11 of its potential returns per unit of risk. Mundus Group is currently generating about 0.03 per unit of risk. If you would invest  10.00  in TransAKT on December 20, 2024 and sell it today you would lose (9.34) from holding TransAKT or give up 93.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	96.83%
Values	Daily Returns

TransAKT  vs.  Mundus Group

TransAKT

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TransAKT are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent forward-looking signals, TransAKT exhibited solid returns over the last few months and may actually be approaching a breakup point.

Mundus Group

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mundus Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile fundamental indicators, Mundus reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TransAKT and Mundus

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

The idea behind TransAKT and Mundus Group 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.