Correlation Between CEOTRONICS and Metro AG

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

Diversification Opportunities for CEOTRONICS and Metro AG

-0.25
  Correlation Coefficient

Very good diversification

The 3 months correlation between CEOTRONICS and Metro is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding CEOTRONICS and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and CEOTRONICS 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 CEOTRONICS 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 CEOTRONICS i.e., CEOTRONICS and Metro AG go up and down completely randomly.

Pair Corralation between CEOTRONICS and Metro AG

Assuming the 90 days trading horizon CEOTRONICS is expected to generate 1.99 times more return on investment than Metro AG. However, CEOTRONICS is 1.99 times more volatile than Metro AG. It trades about 0.1 of its potential returns per unit of risk. Metro AG is currently generating about -0.13 per unit of risk. If you would invest  535.00  in CEOTRONICS on September 28, 2024 and sell it today you would earn a total of  40.00  from holding CEOTRONICS or generate 7.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CEOTRONICS  vs.  Metro AG

 Performance 
       Timeline  
CEOTRONICS 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in CEOTRONICS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, CEOTRONICS may actually be approaching a critical reversion point that can send shares even higher in January 2025.
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 fragile 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.

CEOTRONICS and Metro AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CEOTRONICS and Metro AG

The main advantage of trading using opposite CEOTRONICS and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEOTRONICS 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.
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The idea behind CEOTRONICS 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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