Correlation Between Metacon AB and Troax Group

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

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

Diversification Opportunities for Metacon AB and Troax Group

-0.47

Correlation Coefficient

Metacon AB  Troax Group

Very good diversification

The 3 months correlation between Metacon and Troax is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Metacon AB and Troax Group AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Troax Group AB and Metacon AB 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 Metacon AB are associated (or correlated) with Troax Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Troax Group AB has no effect on the direction of Metacon AB i.e., Metacon AB and Troax Group go up and down completely randomly.

Pair Corralation between Metacon AB and Troax Group

Assuming the 90 days trading horizon Metacon AB is expected to under-perform the Troax Group. In addition to that, Metacon AB is 4.12 times more volatile than Troax Group AB. It trades about -0.22 of its total potential returns per unit of risk. Troax Group AB is currently generating about 0.07 per unit of volatility. If you would invest  21,300  in Troax Group AB on September 28, 2024 and sell it today you would earn a total of  1,500  from holding Troax Group AB or generate 7.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Metacon AB  vs.  Troax Group AB

Metacon AB

Risk-Adjusted Performance

0 of 100

Very Weak

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

Troax Group AB

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Troax Group AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Troax Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Metacon AB and Troax Group

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

The idea behind Metacon AB and Troax Group AB 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.