Correlation Between Metro Systems and Lam Soon
Can any of the company-specific risk be diversified away by investing in both Metro Systems and Lam Soon 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 Systems and Lam Soon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Systems and Lam Soon Public, you can compare the effects of market volatilities on Metro Systems and Lam Soon 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 Systems with a short position of Lam Soon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Systems and Lam Soon.
Diversification Opportunities for Metro Systems and Lam Soon
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Metro and Lam is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metro Systems and Lam Soon Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lam Soon Public and Metro Systems 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 Systems are associated (or correlated) with Lam Soon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lam Soon Public has no effect on the direction of Metro Systems i.e., Metro Systems and Lam Soon go up and down completely randomly.
Pair Corralation between Metro Systems and Lam Soon
Assuming the 90 days trading horizon Metro Systems is expected to under-perform the Lam Soon. But the stock apears to be less risky and, when comparing its historical volatility, Metro Systems is 1.44 times less risky than Lam Soon. The stock trades about -0.15 of its potential returns per unit of risk. The Lam Soon Public is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 486.00 in Lam Soon Public on August 25, 2024 and sell it today you would earn a total of 12.00 from holding Lam Soon Public or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Systems vs. Lam Soon Public
Performance |
| Timeline |
| Metro Systems |
| Lam Soon Public |
Metro Systems and Lam Soon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Systems and Lam Soon
The main advantage of trading using opposite Metro Systems and Lam Soon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Systems position performs unexpectedly, Lam Soon 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 Lam Soon will offset losses from the drop in Lam Soon's long position.| Metro Systems vs. MFEC PCL | Metro Systems vs. Internet Thailand Public | Metro Systems vs. Hana Microelectronics Public | Metro Systems vs. SiS Distribution Public |
| Lam Soon vs. CP ALL Public | Lam Soon vs. Carabao Group Public | Lam Soon vs. Thai Union Group | Lam Soon vs. Minor International Public |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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