Correlation Between Hiru and Metro

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

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

Diversification Opportunities for Hiru and Metro

-0.49

Correlation Coefficient

Hiru  Metro

Very good diversification

The 3 months correlation between Hiru and Metro is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hiru Corp. and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc and Hiru 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 Hiru Corporation are associated (or correlated) with Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Hiru i.e., Hiru and Metro go up and down completely randomly.

Pair Corralation between Hiru and Metro

Given the investment horizon of 90 days Hiru Corporation is expected to generate 17.1 times more return on investment than Metro. However, Hiru is 17.1 times more volatile than Metro Inc. It trades about 0.07 of its potential returns per unit of risk. Metro Inc is currently generating about 0.1 per unit of risk. If you would invest  0.10  in Hiru Corporation on October 7, 2024 and sell it today you would earn a total of  0.00  from holding Hiru Corporation or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.95%
Values	Daily Returns

Hiru Corp.  vs.  Metro Inc

Hiru

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiru Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Metro Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Metro is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Hiru and Metro

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

The idea behind Hiru Corporation and Metro Inc 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.