Correlation Between Metropolitan Steel and MCB Investment
Can any of the company-specific risk be diversified away by investing in both Metropolitan Steel and MCB Investment 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 Metropolitan Steel and MCB Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metropolitan Steel Corp and MCB Investment Manag, you can compare the effects of market volatilities on Metropolitan Steel and MCB Investment 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 Metropolitan Steel with a short position of MCB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metropolitan Steel and MCB Investment.
Diversification Opportunities for Metropolitan Steel and MCB Investment
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Metropolitan and MCB is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan Steel Corp and MCB Investment Manag in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MCB Investment Manag and Metropolitan Steel 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 Metropolitan Steel Corp are associated (or correlated) with MCB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MCB Investment Manag has no effect on the direction of Metropolitan Steel i.e., Metropolitan Steel and MCB Investment go up and down completely randomly.
Pair Corralation between Metropolitan Steel and MCB Investment
Assuming the 90 days trading horizon Metropolitan Steel Corp is expected to under-perform the MCB Investment. But the stock apears to be less risky and, when comparing its historical volatility, Metropolitan Steel Corp is 1.97 times less risky than MCB Investment. The stock trades about -0.33 of its potential returns per unit of risk. The MCB Investment Manag is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,939 in MCB Investment Manag on November 4, 2024 and sell it today you would earn a total of 110.00 from holding MCB Investment Manag or generate 1.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metropolitan Steel Corp vs. MCB Investment Manag
Performance |
| Timeline |
| Metropolitan Steel Corp |
| MCB Investment Manag |
Metropolitan Steel and MCB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metropolitan Steel and MCB Investment
The main advantage of trading using opposite Metropolitan Steel and MCB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan Steel position performs unexpectedly, MCB Investment 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 MCB Investment will offset losses from the drop in MCB Investment's long position.| Metropolitan Steel vs. Air Link Communication | Metropolitan Steel vs. Unilever Pakistan Foods | Metropolitan Steel vs. Pakistan Telecommunication | Metropolitan Steel vs. Bawany Air Products |
| MCB Investment vs. Habib Insurance | MCB Investment vs. IGI Life Insurance | MCB Investment vs. Premier Insurance | MCB Investment vs. Pakistan Tobacco |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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