Correlation Between Malion New and Metro Investment

Can any of the company-specific risk be diversified away by investing in both Malion New and Metro 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 Malion New and Metro Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Malion New Materials and Metro Investment Development, you can compare the effects of market volatilities on Malion New and Metro 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 Malion New with a short position of Metro Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Malion New and Metro Investment.

Diversification Opportunities for Malion New and Metro Investment

0.26

Correlation Coefficient

Malion New  Metro Investment

Modest diversification

The 3 months correlation between Malion and Metro is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Malion New Materials and Metro Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Investment Dev and Malion New 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 Malion New Materials are associated (or correlated) with Metro Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Investment Dev has no effect on the direction of Malion New i.e., Malion New and Metro Investment go up and down completely randomly.

Pair Corralation between Malion New and Metro Investment

Assuming the 90 days trading horizon Malion New Materials is expected to under-perform the Metro Investment. But the stock apears to be less risky and, when comparing its historical volatility, Malion New Materials is 1.08 times less risky than Metro Investment. The stock trades about -0.02 of its potential returns per unit of risk. The Metro Investment Development is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  462.00  in Metro Investment Development on October 10, 2024 and sell it today you would lose (76.00) from holding Metro Investment Development or give up 16.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Malion New Materials  vs.  Metro Investment Development

Malion New Materials

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Malion New Materials are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Malion New may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Metro Investment Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metro Investment Development has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Malion New and Metro Investment

The main advantage of trading using opposite Malion New and Metro Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Malion New position performs unexpectedly, Metro 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 Metro Investment will offset losses from the drop in Metro Investment's long position.

The idea behind Malion New Materials and Metro Investment Development 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.