Correlation Between MT Bank and Biotech Medics

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

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

Diversification Opportunities for MT Bank and Biotech Medics

-0.7

Correlation Coefficient

MT Bank  Biotech Medics

Excellent diversification

The 3 months correlation between MTB-PH and Biotech is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding MT Bank and Biotech Medics Ne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotech Medics Ne and MT Bank 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 MT Bank are associated (or correlated) with Biotech Medics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotech Medics Ne has no effect on the direction of MT Bank i.e., MT Bank and Biotech Medics go up and down completely randomly.

Pair Corralation between MT Bank and Biotech Medics

Assuming the 90 days trading horizon MT Bank is expected to generate 20.65 times less return on investment than Biotech Medics. But when comparing it to its historical volatility, MT Bank is 37.43 times less risky than Biotech Medics. It trades about 0.07 of its potential returns per unit of risk. Biotech Medics Ne is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1.09  in Biotech Medics Ne on August 1, 2025 and sell it today you would lose (0.25) from holding Biotech Medics Ne or give up 22.94% of portfolio value over 90 days.

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

MT Bank  vs.  Biotech Medics Ne

MT Bank

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in MT Bank are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong fundamental drivers, MT Bank is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Biotech Medics Ne

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Biotech Medics Ne are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, Biotech Medics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MT Bank and Biotech Medics

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

The idea behind MT Bank and Biotech Medics Ne 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.