Correlation Between Unitech and Mtar Technologies

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

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

Diversification Opportunities for Unitech and Mtar Technologies

0.9

Correlation Coefficient

Unitech  Mtar Technologies

Almost no diversification

The 3 months correlation between Unitech and Mtar is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Unitech Limited and Mtar Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mtar Technologies and Unitech 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 Unitech Limited are associated (or correlated) with Mtar Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mtar Technologies has no effect on the direction of Unitech i.e., Unitech and Mtar Technologies go up and down completely randomly.

Pair Corralation between Unitech and Mtar Technologies

Assuming the 90 days trading horizon Unitech Limited is expected to under-perform the Mtar Technologies. In addition to that, Unitech is 1.0 times more volatile than Mtar Technologies Limited. It trades about -0.18 of its total potential returns per unit of risk. Mtar Technologies Limited is currently generating about -0.1 per unit of volatility. If you would invest  165,680  in Mtar Technologies Limited on December 30, 2024 and sell it today you would lose (37,565) from holding Mtar Technologies Limited or give up 22.67% of portfolio value over 90 days.

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

Unitech Limited  vs.  Mtar Technologies Limited

Unitech Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Unitech Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Mtar Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mtar Technologies Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Unitech and Mtar Technologies

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

The idea behind Unitech Limited and Mtar Technologies Limited 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.