Correlation Between INDO RAMA and Metro AG

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

By analyzing existing cross correlation between INDO RAMA SYNTHETIC and Metro AG, you can compare the effects of market volatilities on INDO RAMA and Metro AG 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 INDO RAMA with a short position of Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDO RAMA and Metro AG.

Diversification Opportunities for INDO RAMA and Metro AG

0.0

Correlation Coefficient

INDO RAMA  Metro AG

Pay attention - limited upside

The 3 months correlation between INDO and Metro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INDO RAMA SYNTHETIC and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and INDO RAMA 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 INDO RAMA SYNTHETIC are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of INDO RAMA i.e., INDO RAMA and Metro AG go up and down completely randomly.

Pair Corralation between INDO RAMA and Metro AG

Assuming the 90 days trading horizon INDO RAMA SYNTHETIC is expected to generate 1.73 times more return on investment than Metro AG. However, INDO RAMA is 1.73 times more volatile than Metro AG. It trades about -0.02 of its potential returns per unit of risk. Metro AG is currently generating about -0.08 per unit of risk. If you would invest  35.00  in INDO RAMA SYNTHETIC on October 11, 2024 and sell it today you would lose (14.00) from holding INDO RAMA SYNTHETIC or give up 40.0% of portfolio value over 90 days.

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

INDO RAMA SYNTHETIC  vs.  Metro AG

INDO RAMA SYNTHETIC

Risk-Adjusted Performance

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Very Weak

Over the last 90 days INDO RAMA SYNTHETIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, INDO RAMA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Metro AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metro AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's fundamental drivers 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 INDO RAMA and Metro AG

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

The idea behind INDO RAMA SYNTHETIC and Metro AG 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.