Correlation Between Metro Systems and NEP Realty
Can any of the company-specific risk be diversified away by investing in both Metro Systems and NEP Realty 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 NEP Realty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Systems and NEP Realty and, you can compare the effects of market volatilities on Metro Systems and NEP Realty 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 NEP Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Systems and NEP Realty.
Diversification Opportunities for Metro Systems and NEP Realty
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metro and NEP is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Metro Systems and NEP Realty and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEP Realty 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 NEP Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEP Realty has no effect on the direction of Metro Systems i.e., Metro Systems and NEP Realty go up and down completely randomly.
Pair Corralation between Metro Systems and NEP Realty
Assuming the 90 days trading horizon Metro Systems is expected to generate 111.67 times less return on investment than NEP Realty. But when comparing it to its historical volatility, Metro Systems is 6.72 times less risky than NEP Realty. It trades about 0.0 of its potential returns per unit of risk. NEP Realty and is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 21.00 in NEP Realty and on October 7, 2024 and sell it today you would earn a total of 1.00 from holding NEP Realty and or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Systems vs. NEP Realty and
Performance |
| Timeline |
| Metro Systems |
| NEP Realty |
Metro Systems and NEP Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Systems and NEP Realty
The main advantage of trading using opposite Metro Systems and NEP Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Systems position performs unexpectedly, NEP Realty 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 NEP Realty will offset losses from the drop in NEP Realty'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 |
| NEP Realty vs. Nawarat Patanakarn Public | NEP Realty vs. Newcity Public | NEP Realty vs. Pan Asia Footwear | NEP Realty vs. Ocean Glass 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios |