Correlation Between Metro Systems and Ocean Glass
Can any of the company-specific risk be diversified away by investing in both Metro Systems and Ocean Glass 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 Ocean Glass into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Systems and Ocean Glass Public, you can compare the effects of market volatilities on Metro Systems and Ocean Glass 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 Ocean Glass. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro Systems and Ocean Glass.
Diversification Opportunities for Metro Systems and Ocean Glass
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Metro and Ocean is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Metro Systems and Ocean Glass Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Glass 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 Ocean Glass. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Glass Public has no effect on the direction of Metro Systems i.e., Metro Systems and Ocean Glass go up and down completely randomly.
Pair Corralation between Metro Systems and Ocean Glass
Assuming the 90 days trading horizon Metro Systems is expected to generate 0.39 times more return on investment than Ocean Glass. However, Metro Systems is 2.59 times less risky than Ocean Glass. It trades about 0.14 of its potential returns per unit of risk. Ocean Glass Public is currently generating about -0.13 per unit of risk. If you would invest 770.00 in Metro Systems on October 22, 2024 and sell it today you would earn a total of 20.00 from holding Metro Systems or generate 2.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Metro Systems vs. Ocean Glass Public
Performance |
| Timeline |
| Metro Systems |
| Ocean Glass Public |
Metro Systems and Ocean Glass Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro Systems and Ocean Glass
The main advantage of trading using opposite Metro Systems and Ocean Glass positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro Systems position performs unexpectedly, Ocean Glass 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 Ocean Glass will offset losses from the drop in Ocean Glass' 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 |
| Ocean Glass vs. Peoples Garment Public | Ocean Glass vs. LPN Development Public | Ocean Glass vs. Nawarat Patanakarn Public | Ocean Glass vs. President Bakery 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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