Correlation Between MQGAU and Tomra Systems

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

By analyzing existing cross correlation between MQGAU 5376057 23 SEP 27 and Tomra Systems ASA, you can compare the effects of market volatilities on MQGAU and Tomra Systems 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 MQGAU with a short position of Tomra Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of MQGAU and Tomra Systems.

Diversification Opportunities for MQGAU and Tomra Systems

0.25

Correlation Coefficient

MQGAU  Tomra Systems

Modest diversification

The 3 months correlation between MQGAU and Tomra is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding MQGAU 5376057 23 SEP 27 and Tomra Systems ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tomra Systems ASA and MQGAU 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 MQGAU 5376057 23 SEP 27 are associated (or correlated) with Tomra Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tomra Systems ASA has no effect on the direction of MQGAU i.e., MQGAU and Tomra Systems go up and down completely randomly.

Pair Corralation between MQGAU and Tomra Systems

Assuming the 90 days trading horizon MQGAU 5376057 23 SEP 27 is expected to under-perform the Tomra Systems. But the bond apears to be less risky and, when comparing its historical volatility, MQGAU 5376057 23 SEP 27 is 56.22 times less risky than Tomra Systems. The bond trades about -0.09 of its potential returns per unit of risk. The Tomra Systems ASA is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,436  in Tomra Systems ASA on December 2, 2024 and sell it today you would earn a total of  40.00  from holding Tomra Systems ASA or generate 2.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	22.95%
Values	Daily Returns

MQGAU 5376057 23 SEP 27  vs.  Tomra Systems ASA

MQGAU 5376057 23

Risk-Adjusted Performance

Very Weak

Over the last 90 days MQGAU 5376057 23 SEP 27 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, MQGAU is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tomra Systems ASA

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tomra Systems ASA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Tomra Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with MQGAU and Tomra Systems

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

The idea behind MQGAU 5376057 23 SEP 27 and Tomra Systems ASA 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.