Correlation Between Concepcion Industrial and Metropolitan Bank

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

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

Diversification Opportunities for Concepcion Industrial and Metropolitan Bank

0.09

Correlation Coefficient

Concepcion Industrial  Metropolitan Bank

Significant diversification

The 3 months correlation between Concepcion and Metropolitan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Metropolitan Bank Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Trust and Concepcion 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 Concepcion Industrial Corp are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Trust has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and Metropolitan Bank go up and down completely randomly.

Pair Corralation between Concepcion Industrial and Metropolitan Bank

Assuming the 90 days trading horizon Concepcion Industrial Corp is expected to generate 0.85 times more return on investment than Metropolitan Bank. However, Concepcion Industrial Corp is 1.18 times less risky than Metropolitan Bank. It trades about 0.06 of its potential returns per unit of risk. Metropolitan Bank Trust is currently generating about 0.0 per unit of risk. If you would invest  1,338  in Concepcion Industrial Corp on December 26, 2024 and sell it today you would earn a total of  62.00  from holding Concepcion Industrial Corp or generate 4.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	93.33%
Values	Daily Returns

Concepcion Industrial Corp  vs.  Metropolitan Bank Trust

Concepcion Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Concepcion Industrial Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Concepcion Industrial is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Metropolitan Bank Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metropolitan Bank Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Metropolitan Bank is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Concepcion Industrial and Metropolitan Bank

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

The idea behind Concepcion Industrial Corp and Metropolitan Bank Trust 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .