Correlation Between Concepcion Industrial and Metro Retail

Can any of the company-specific risk be diversified away by investing in both Concepcion Industrial and Metro Retail 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 Metro Retail 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 Metro Retail Stores, you can compare the effects of market volatilities on Concepcion Industrial and Metro Retail 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 Metro Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Concepcion Industrial and Metro Retail.

Diversification Opportunities for Concepcion Industrial and Metro Retail

0.29

Correlation Coefficient

Concepcion Industrial  Metro Retail

Modest diversification

The 3 months correlation between Concepcion and Metro is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Concepcion Industrial Corp and Metro Retail Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Retail Stores 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 Metro Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Retail Stores has no effect on the direction of Concepcion Industrial i.e., Concepcion Industrial and Metro Retail go up and down completely randomly.

Pair Corralation between Concepcion Industrial and Metro Retail

Assuming the 90 days trading horizon Concepcion Industrial is expected to generate 2.03 times less return on investment than Metro Retail. But when comparing it to its historical volatility, Concepcion Industrial Corp is 1.13 times less risky than Metro Retail. It trades about 0.04 of its potential returns per unit of risk. Metro Retail Stores is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Metro Retail Stores on December 4, 2024 and sell it today you would earn a total of  8.00  from holding Metro Retail Stores or generate 6.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	89.83%
Values	Daily Returns

Concepcion Industrial Corp  vs.  Metro Retail Stores

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 3 (%) 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.

Metro Retail Stores

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Retail Stores are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Metro Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Concepcion Industrial and Metro Retail

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

The idea behind Concepcion Industrial Corp and Metro Retail Stores 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.