Correlation Between Aster DM and Metropolis Healthcare

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

By analyzing existing cross correlation between Aster DM Healthcare and Metropolis Healthcare Limited, you can compare the effects of market volatilities on Aster DM and Metropolis Healthcare 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 Aster DM with a short position of Metropolis Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aster DM and Metropolis Healthcare.

Diversification Opportunities for Aster DM and Metropolis Healthcare

-0.16

Correlation Coefficient

Aster DM  Metropolis Healthcare

Good diversification

The 3 months correlation between Aster and Metropolis is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Aster DM Healthcare and Metropolis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolis Healthcare and Aster DM 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 Aster DM Healthcare are associated (or correlated) with Metropolis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolis Healthcare has no effect on the direction of Aster DM i.e., Aster DM and Metropolis Healthcare go up and down completely randomly.

Pair Corralation between Aster DM and Metropolis Healthcare

Assuming the 90 days trading horizon Aster DM Healthcare is expected to generate 1.25 times more return on investment than Metropolis Healthcare. However, Aster DM is 1.25 times more volatile than Metropolis Healthcare Limited. It trades about 0.11 of its potential returns per unit of risk. Metropolis Healthcare Limited is currently generating about -0.04 per unit of risk. If you would invest  42,235  in Aster DM Healthcare on September 23, 2024 and sell it today you would earn a total of  6,400  from holding Aster DM Healthcare or generate 15.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Aster DM Healthcare  vs.  Metropolis Healthcare Limited

Aster DM Healthcare

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aster DM Healthcare are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Aster DM displayed solid returns over the last few months and may actually be approaching a breakup point.

Metropolis Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metropolis Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Metropolis Healthcare is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aster DM and Metropolis Healthcare

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

The idea behind Aster DM Healthcare and Metropolis Healthcare Limited 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.