Correlation Between Superior Plus and Metro AG
Can any of the company-specific risk be diversified away by investing in both Superior Plus 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 Superior Plus and Metro AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and Metro AG, you can compare the effects of market volatilities on Superior Plus 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 Superior Plus with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and Metro AG.
Diversification Opportunities for Superior Plus and Metro AG
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Superior and Metro is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and Superior Plus 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 Superior Plus Corp 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 Superior Plus i.e., Superior Plus and Metro AG go up and down completely randomly.
Pair Corralation between Superior Plus and Metro AG
Assuming the 90 days horizon Superior Plus Corp is expected to under-perform the Metro AG. But the stock apears to be less risky and, when comparing its historical volatility, Superior Plus Corp is 1.13 times less risky than Metro AG. The stock trades about -0.02 of its potential returns per unit of risk. The Metro AG is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 739.00 in Metro AG on December 7, 2024 and sell it today you would lose (208.00) from holding Metro AG or give up 28.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Superior Plus Corp vs. Metro AG
Performance |
| Timeline |
| Superior Plus Corp |
| Metro AG |
Superior Plus and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and Metro AG
The main advantage of trading using opposite Superior Plus and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus 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.| Superior Plus vs. Television Broadcasts Limited | Superior Plus vs. BROADPEAK SA EO | Superior Plus vs. Gaztransport Technigaz SA | Superior Plus vs. SAFEROADS HLDGS |
| Metro AG vs. Transportadora de Gas | Metro AG vs. USU Software AG | Metro AG vs. Beta Systems Software | Metro AG vs. Gaztransport Technigaz SA |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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