Correlation Between MetaLabs and BBC
Can any of the company-specific risk be diversified away by investing in both MetaLabs and BBC 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 MetaLabs and BBC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetaLabs Co and BBC Co, you can compare the effects of market volatilities on MetaLabs and BBC 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 MetaLabs with a short position of BBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetaLabs and BBC.
Diversification Opportunities for MetaLabs and BBC
Poor diversification
The 3 months correlation between MetaLabs and BBC is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding MetaLabs Co and BBC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBC Co and MetaLabs 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 MetaLabs Co are associated (or correlated) with BBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBC Co has no effect on the direction of MetaLabs i.e., MetaLabs and BBC go up and down completely randomly.
Pair Corralation between MetaLabs and BBC
Assuming the 90 days trading horizon MetaLabs Co is expected to under-perform the BBC. In addition to that, MetaLabs is 1.6 times more volatile than BBC Co. It trades about -0.02 of its total potential returns per unit of risk. BBC Co is currently generating about 0.01 per unit of volatility. If you would invest 803,152 in BBC Co on August 26, 2024 and sell it today you would earn a total of 16,848 from holding BBC Co or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MetaLabs Co vs. BBC Co
Performance |
| Timeline |
| MetaLabs |
| BBC Co |
MetaLabs and BBC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetaLabs and BBC
The main advantage of trading using opposite MetaLabs and BBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetaLabs position performs unexpectedly, BBC 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 BBC will offset losses from the drop in BBC's long position.| MetaLabs vs. Seohee Construction Co | MetaLabs vs. Hanshin Construction Co | MetaLabs vs. Seoam Machinery Industry | MetaLabs vs. Daiyang Metal Co |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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