Correlation Between Metro Retail and Pacificonline Systems
Can any of the company-specific risk be diversified away by investing in both Metro Retail and Pacificonline Systems 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 Metro Retail and Pacificonline Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Retail Stores and Pacificonline Systems, you can compare the effects of market volatilities on Metro Retail and Pacificonline Systems 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 Metro Retail with a short position of Pacificonline Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and Pacificonline Systems.
Diversification Opportunities for Metro Retail and Pacificonline Systems
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metro and Pacificonline is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and Pacificonline Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacificonline Systems and Metro Retail 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 Metro Retail Stores are associated (or correlated) with Pacificonline Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacificonline Systems has no effect on the direction of Metro Retail i.e., Metro Retail and Pacificonline Systems go up and down completely randomly.
Pair Corralation between Metro Retail and Pacificonline Systems
Assuming the 90 days trading horizon Metro Retail Stores is expected to generate 0.37 times more return on investment than Pacificonline Systems. However, Metro Retail Stores is 2.71 times less risky than Pacificonline Systems. It trades about -0.08 of its potential returns per unit of risk. Pacificonline Systems is currently generating about -0.17 per unit of risk. If you would invest 122.00 in Metro Retail Stores on August 29, 2024 and sell it today you would lose (3.00) from holding Metro Retail Stores or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Metro Retail Stores vs. Pacificonline Systems
Performance |
| Timeline |
| Metro Retail Stores |
| Pacificonline Systems |
Metro Retail and Pacificonline Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Retail and Pacificonline Systems
The main advantage of trading using opposite Metro Retail and Pacificonline Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail position performs unexpectedly, Pacificonline Systems 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 Pacificonline Systems will offset losses from the drop in Pacificonline Systems' long position.| Metro Retail vs. Allhome Corp | Metro Retail vs. Jollibee Foods Corp | Metro Retail vs. LFM Properties Corp | Metro Retail vs. PXP Energy Corp |
| Pacificonline Systems vs. Concepcion Industrial Corp | Pacificonline Systems vs. Philex Mining Corp | Pacificonline Systems vs. Sun Life Financial | Pacificonline Systems vs. Suntrust Home Developers |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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