Correlation Between TOREX SEMICONDUCTOR and Metro AG
Can any of the company-specific risk be diversified away by investing in both TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TOREX SEMICONDUCTOR LTD and Metro AG, you can compare the effects of market volatilities on TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of TOREX SEMICONDUCTOR and Metro AG.
Diversification Opportunities for TOREX SEMICONDUCTOR and Metro AG
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between TOREX and Metro is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding TOREX SEMICONDUCTOR LTD and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and TOREX SEMICONDUCTOR 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 TOREX SEMICONDUCTOR LTD 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 TOREX SEMICONDUCTOR i.e., TOREX SEMICONDUCTOR and Metro AG go up and down completely randomly.
Pair Corralation between TOREX SEMICONDUCTOR and Metro AG
Assuming the 90 days horizon TOREX SEMICONDUCTOR LTD is expected to generate 0.95 times more return on investment than Metro AG. However, TOREX SEMICONDUCTOR LTD is 1.05 times less risky than Metro AG. It trades about -0.24 of its potential returns per unit of risk. Metro AG is currently generating about -0.26 per unit of risk. If you would invest 780.00 in TOREX SEMICONDUCTOR LTD on September 20, 2024 and sell it today you would lose (80.00) from holding TOREX SEMICONDUCTOR LTD or give up 10.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
TOREX SEMICONDUCTOR LTD vs. Metro AG
Performance |
| Timeline |
| TOREX SEMICONDUCTOR LTD |
| Metro AG |
TOREX SEMICONDUCTOR and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TOREX SEMICONDUCTOR and Metro AG
The main advantage of trading using opposite TOREX SEMICONDUCTOR and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TOREX SEMICONDUCTOR 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.| TOREX SEMICONDUCTOR vs. Fast Retailing Co | TOREX SEMICONDUCTOR vs. Taiwan Semiconductor Manufacturing | TOREX SEMICONDUCTOR vs. SUN ART RETAIL | TOREX SEMICONDUCTOR vs. TRADEGATE |
| Metro AG vs. MOVIE GAMES SA | Metro AG vs. NXP Semiconductors NV | Metro AG vs. GEAR4MUSIC LS 10 | Metro AG vs. TOREX SEMICONDUCTOR LTD |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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