Correlation Between Valmont Industries and Mytilineos

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

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

Diversification Opportunities for Valmont Industries and Mytilineos

-0.35

Correlation Coefficient

Valmont Industries  Mytilineos

Very good diversification

The 3 months correlation between Valmont and Mytilineos is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Valmont Industries and Mytilineos SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mytilineos SA and Valmont Industries 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 Valmont Industries are associated (or correlated) with Mytilineos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mytilineos SA has no effect on the direction of Valmont Industries i.e., Valmont Industries and Mytilineos go up and down completely randomly.

Pair Corralation between Valmont Industries and Mytilineos

Considering the 90-day investment horizon Valmont Industries is expected to generate 1.49 times more return on investment than Mytilineos. However, Valmont Industries is 1.49 times more volatile than Mytilineos SA. It trades about 0.11 of its potential returns per unit of risk. Mytilineos SA is currently generating about -0.02 per unit of risk. If you would invest  21,284  in Valmont Industries on October 22, 2024 and sell it today you would earn a total of  12,351  from holding Valmont Industries or generate 58.03% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.56%
Values	Daily Returns

Valmont Industries  vs.  Mytilineos SA

Valmont Industries

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Valmont Industries are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly abnormal primary indicators, Valmont Industries demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mytilineos SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mytilineos SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, Mytilineos is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Valmont Industries and Mytilineos

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

The idea behind Valmont Industries and Mytilineos SA 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.