Correlation Between Metro Systems and MFEC PCL
Can any of the company-specific risk be diversified away by investing in both Metro Systems and MFEC PCL 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 MFEC PCL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Systems and MFEC PCL, you can compare the effects of market volatilities on Metro Systems and MFEC PCL 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 MFEC PCL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Systems and MFEC PCL.
Diversification Opportunities for Metro Systems and MFEC PCL
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Metro and MFEC is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Metro Systems and MFEC PCL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MFEC PCL 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 MFEC PCL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MFEC PCL has no effect on the direction of Metro Systems i.e., Metro Systems and MFEC PCL go up and down completely randomly.
Pair Corralation between Metro Systems and MFEC PCL
Assuming the 90 days trading horizon Metro Systems is expected to under-perform the MFEC PCL. But the stock apears to be less risky and, when comparing its historical volatility, Metro Systems is 1.74 times less risky than MFEC PCL. The stock trades about -0.15 of its potential returns per unit of risk. The MFEC PCL is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 610.00 in MFEC PCL on August 29, 2024 and sell it today you would earn a total of 5.00 from holding MFEC PCL or generate 0.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Systems vs. MFEC PCL
Performance |
| Timeline |
| Metro Systems |
| MFEC PCL |
Metro Systems and MFEC PCL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Systems and MFEC PCL
The main advantage of trading using opposite Metro Systems and MFEC PCL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Systems position performs unexpectedly, MFEC PCL 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 MFEC PCL will offset losses from the drop in MFEC PCL'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 |
| MFEC PCL vs. AP Public | MFEC PCL vs. Jasmine International Public | MFEC PCL vs. Asia Plus Group | MFEC PCL vs. Bangkok Aviation Fuel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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