Correlation Between MetLife and Adaro Energy
Can any of the company-specific risk be diversified away by investing in both MetLife and Adaro Energy 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 MetLife and Adaro Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MetLife and Adaro Energy Tbk, you can compare the effects of market volatilities on MetLife and Adaro Energy 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 MetLife with a short position of Adaro Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of MetLife and Adaro Energy.
Diversification Opportunities for MetLife and Adaro Energy
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between MetLife and Adaro is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding MetLife and Adaro Energy Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adaro Energy Tbk and MetLife 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 MetLife are associated (or correlated) with Adaro Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adaro Energy Tbk has no effect on the direction of MetLife i.e., MetLife and Adaro Energy go up and down completely randomly.
Pair Corralation between MetLife and Adaro Energy
Considering the 90-day investment horizon MetLife is expected to generate 1.27 times less return on investment than Adaro Energy. But when comparing it to its historical volatility, MetLife is 3.15 times less risky than Adaro Energy. It trades about 0.11 of its potential returns per unit of risk. Adaro Energy Tbk is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 633.00 in Adaro Energy Tbk on September 4, 2024 and sell it today you would earn a total of 267.00 from holding Adaro Energy Tbk or generate 42.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.96% |
| Values | Daily Returns |
MetLife vs. Adaro Energy Tbk
Performance |
| Timeline |
| MetLife |
| Adaro Energy Tbk |
MetLife and Adaro Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MetLife and Adaro Energy
The main advantage of trading using opposite MetLife and Adaro Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MetLife position performs unexpectedly, Adaro Energy 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 Adaro Energy will offset losses from the drop in Adaro Energy's long position.| MetLife vs. Aflac Incorporated | MetLife vs. Manulife Financial Corp | MetLife vs. Jackson Financial | MetLife vs. Globe Life |
| Adaro Energy vs. Morien Resources Corp | Adaro Energy vs. Alliance Resource Partners | Adaro Energy vs. Brera Holdings PLC | Adaro Energy vs. Jackson Financial |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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