Correlation Between Niching Industrial and MetaTech

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

By analyzing existing cross correlation between Niching Industrial and MetaTech AP, you can compare the effects of market volatilities on Niching Industrial and MetaTech 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 Niching Industrial with a short position of MetaTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niching Industrial and MetaTech.

Diversification Opportunities for Niching Industrial and MetaTech

0.1

Correlation Coefficient

Niching Industrial  MetaTech

Average diversification

The 3 months correlation between Niching and MetaTech is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Niching Industrial and MetaTech AP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaTech AP and Niching Industrial 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 Niching Industrial are associated (or correlated) with MetaTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaTech AP has no effect on the direction of Niching Industrial i.e., Niching Industrial and MetaTech go up and down completely randomly.

Pair Corralation between Niching Industrial and MetaTech

Assuming the 90 days trading horizon Niching Industrial is expected to generate 18.1 times less return on investment than MetaTech. In addition to that, Niching Industrial is 1.1 times more volatile than MetaTech AP. It trades about 0.01 of its total potential returns per unit of risk. MetaTech AP is currently generating about 0.13 per unit of volatility. If you would invest  4,795  in MetaTech AP on September 15, 2024 and sell it today you would earn a total of  245.00  from holding MetaTech AP or generate 5.11% return on investment over 90 days.

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

Niching Industrial  vs.  MetaTech AP

Niching Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Niching Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

MetaTech AP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MetaTech AP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, MetaTech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Niching Industrial and MetaTech

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

The idea behind Niching Industrial and MetaTech AP 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.