Correlation Between Crown Asia and Metropolitan Bank
Can any of the company-specific risk be diversified away by investing in both Crown Asia and Metropolitan Bank 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 Crown Asia and Metropolitan Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Crown Asia Chemicals and Metropolitan Bank Trust, you can compare the effects of market volatilities on Crown Asia and Metropolitan Bank 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 Crown Asia with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crown Asia and Metropolitan Bank.
Diversification Opportunities for Crown Asia and Metropolitan Bank
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Crown and Metropolitan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Crown Asia Chemicals and Metropolitan Bank Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Trust and Crown Asia 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 Crown Asia Chemicals are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Trust has no effect on the direction of Crown Asia i.e., Crown Asia and Metropolitan Bank go up and down completely randomly.
Pair Corralation between Crown Asia and Metropolitan Bank
Assuming the 90 days trading horizon Crown Asia Chemicals is expected to generate 2.28 times more return on investment than Metropolitan Bank. However, Crown Asia is 2.28 times more volatile than Metropolitan Bank Trust. It trades about -0.02 of its potential returns per unit of risk. Metropolitan Bank Trust is currently generating about -0.31 per unit of risk. If you would invest 174.00 in Crown Asia Chemicals on November 2, 2024 and sell it today you would lose (3.00) from holding Crown Asia Chemicals or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Crown Asia Chemicals vs. Metropolitan Bank Trust
Performance |
| Timeline |
| Crown Asia Chemicals |
| Metropolitan Bank Trust |
Crown Asia and Metropolitan Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Crown Asia and Metropolitan Bank
The main advantage of trading using opposite Crown Asia and Metropolitan Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crown Asia position performs unexpectedly, Metropolitan Bank 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 Metropolitan Bank will offset losses from the drop in Metropolitan Bank's long position.| Crown Asia vs. SM Investments Corp | Crown Asia vs. Atlas Consolidated Mining | Crown Asia vs. STI Education Systems | Crown Asia vs. Lepanto Consolidated Mining |
| Metropolitan Bank vs. Philex Mining Corp | Metropolitan Bank vs. Atlas Consolidated Mining | Metropolitan Bank vs. Robinsons Retail Holdings | Metropolitan Bank vs. Lepanto Consolidated Mining |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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