Correlation Between Wirtek AS and Matas AS

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

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

Diversification Opportunities for Wirtek AS and Matas AS

0.11

Correlation Coefficient

Wirtek AS  Matas AS

Average diversification

The 3 months correlation between Wirtek and Matas is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wirtek AS and Matas AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matas AS and Wirtek AS 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 Wirtek AS are associated (or correlated) with Matas AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matas AS has no effect on the direction of Wirtek AS i.e., Wirtek AS and Matas AS go up and down completely randomly.

Pair Corralation between Wirtek AS and Matas AS

Assuming the 90 days trading horizon Wirtek AS is expected to under-perform the Matas AS. In addition to that, Wirtek AS is 2.74 times more volatile than Matas AS. It trades about -0.01 of its total potential returns per unit of risk. Matas AS is currently generating about -0.01 per unit of volatility. If you would invest  13,520  in Matas AS on December 31, 2024 and sell it today you would lose (180.00) from holding Matas AS or give up 1.33% of portfolio value over 90 days.

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

Wirtek AS  vs.  Matas AS

Wirtek AS

Risk-Adjusted Performance

Very Weak

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

Matas AS

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matas AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Matas AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Wirtek AS and Matas AS

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

The idea behind Wirtek AS and Matas AS 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.