Correlation Between Metrovacesa and Amper SA
Can any of the company-specific risk be diversified away by investing in both Metrovacesa and Amper SA 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 Metrovacesa and Amper SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metrovacesa SA and Amper SA, you can compare the effects of market volatilities on Metrovacesa and Amper SA 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 Metrovacesa with a short position of Amper SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metrovacesa and Amper SA.
Diversification Opportunities for Metrovacesa and Amper SA
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Metrovacesa and Amper is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Metrovacesa SA and Amper SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amper SA and Metrovacesa 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 Metrovacesa SA are associated (or correlated) with Amper SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amper SA has no effect on the direction of Metrovacesa i.e., Metrovacesa and Amper SA go up and down completely randomly.
Pair Corralation between Metrovacesa and Amper SA
Assuming the 90 days trading horizon Metrovacesa SA is expected to generate 0.25 times more return on investment than Amper SA. However, Metrovacesa SA is 3.95 times less risky than Amper SA. It trades about 0.1 of its potential returns per unit of risk. Amper SA is currently generating about -0.1 per unit of risk. If you would invest 855.00 in Metrovacesa SA on August 27, 2024 and sell it today you would earn a total of 16.00 from holding Metrovacesa SA or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metrovacesa SA vs. Amper SA
Performance |
| Timeline |
| Metrovacesa SA |
| Amper SA |
Metrovacesa and Amper SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metrovacesa and Amper SA
The main advantage of trading using opposite Metrovacesa and Amper SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metrovacesa position performs unexpectedly, Amper SA 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 Amper SA will offset losses from the drop in Amper SA's long position.The idea behind Metrovacesa SA and Amper SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Transaction History module to view history of all your transactions and understand their impact on performance.
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