Correlation Between MTV and Kusama

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

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

Diversification Opportunities for MTV and Kusama

0.79

Correlation Coefficient

MTV  Kusama

Poor diversification

The 3 months correlation between MTV and Kusama is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding MTV and Kusama in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kusama and MTV 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 MTV are associated (or correlated) with Kusama. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kusama has no effect on the direction of MTV i.e., MTV and Kusama go up and down completely randomly.

Pair Corralation between MTV and Kusama

Assuming the 90 days trading horizon MTV is expected to generate 1.26 times more return on investment than Kusama. However, MTV is 1.26 times more volatile than Kusama. It trades about 0.02 of its potential returns per unit of risk. Kusama is currently generating about -0.01 per unit of risk. If you would invest  0.20  in MTV on January 29, 2024 and sell it today you would lose (0.06) from holding MTV or give up 30.24% of portfolio value over 90 days.

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

MTV  vs.  Kusama

MTV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Kusama

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kusama has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for Kusama shareholders.

Pair Trading with MTV and Kusama

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

The idea behind MTV and Kusama 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .