Correlation Between Metro Retail and Prime Media
Can any of the company-specific risk be diversified away by investing in both Metro Retail and Prime Media 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 Prime Media 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 Prime Media Holdings, you can compare the effects of market volatilities on Metro Retail and Prime Media 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 Prime Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Retail and Prime Media.
Diversification Opportunities for Metro Retail and Prime Media
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Metro and Prime is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Metro Retail Stores and Prime Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prime Media Holdings 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 Prime Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prime Media Holdings has no effect on the direction of Metro Retail i.e., Metro Retail and Prime Media go up and down completely randomly.
Pair Corralation between Metro Retail and Prime Media
Assuming the 90 days trading horizon Metro Retail Stores is expected to generate 0.44 times more return on investment than Prime Media. However, Metro Retail Stores is 2.29 times less risky than Prime Media. It trades about -0.08 of its potential returns per unit of risk. Prime Media Holdings is currently generating about -0.35 per unit of risk. If you would invest 122.00 in Metro Retail Stores on August 28, 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 | 90.48% |
| Values | Daily Returns |
Metro Retail Stores vs. Prime Media Holdings
Performance |
| Timeline |
| Metro Retail Stores |
| Prime Media Holdings |
Metro Retail and Prime Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Retail and Prime Media
The main advantage of trading using opposite Metro Retail and Prime Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Retail position performs unexpectedly, Prime Media 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 Prime Media will offset losses from the drop in Prime Media's 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 |
| Prime Media vs. Asia United Bank | Prime Media vs. Metro Retail Stores | Prime Media vs. BDO Unibank | Prime Media vs. Converge Information Communications |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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