Correlation Between MOVIE GAMES and Metro AG

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Can any of the company-specific risk be diversified away by investing in both MOVIE GAMES and Metro AG 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 MOVIE GAMES and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOVIE GAMES SA and Metro AG, you can compare the effects of market volatilities on MOVIE GAMES and Metro AG 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 MOVIE GAMES with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOVIE GAMES and Metro AG.

Diversification Opportunities for MOVIE GAMES and Metro AG

MOVIEMetroDiversified AwayMOVIEMetroDiversified Away100%
0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between MOVIE and Metro is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MOVIE GAMES SA and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and MOVIE GAMES 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 MOVIE GAMES SA are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of MOVIE GAMES i.e., MOVIE GAMES and Metro AG go up and down completely randomly.

Pair Corralation between MOVIE GAMES and Metro AG

Assuming the 90 days horizon MOVIE GAMES SA is expected to under-perform the Metro AG. But the stock apears to be less risky and, when comparing its historical volatility, MOVIE GAMES SA is 1.3 times less risky than Metro AG. The stock trades about -0.6 of its potential returns per unit of risk. The Metro AG is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  434.00  in Metro AG on September 26, 2024 and sell it today you would lose (43.00) from holding Metro AG or give up 9.91% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

MOVIE GAMES SA  vs.  Metro AG

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -30-20-1001020
JavaScript chart by amCharts 3.21.152LH B4B
       Timeline  
MOVIE GAMES SA 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days MOVIE GAMES SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec33.544.5
Metro AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Metro AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

MOVIE GAMES and Metro AG Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.77-2.82-1.88-0.930.01120.671.342.012.68 0.060.070.080.090.100.11
JavaScript chart by amCharts 3.21.152LH B4B
       Returns  

Pair Trading with MOVIE GAMES and Metro AG

The main advantage of trading using opposite MOVIE GAMES and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOVIE GAMES position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.
The idea behind MOVIE GAMES SA and Metro AG 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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