Correlation Between Metrogas and NIKE

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

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

Diversification Opportunities for Metrogas and NIKE

-0.81

Correlation Coefficient

Metrogas  NIKE

Pay attention - limited upside

The 3 months correlation between Metrogas and NIKE is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Metrogas SA and NIKE Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIKE Inc and Metrogas 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 Metrogas SA are associated (or correlated) with NIKE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIKE Inc has no effect on the direction of Metrogas i.e., Metrogas and NIKE go up and down completely randomly.

Pair Corralation between Metrogas and NIKE

Assuming the 90 days trading horizon Metrogas SA is expected to generate 1.53 times more return on investment than NIKE. However, Metrogas is 1.53 times more volatile than NIKE Inc. It trades about 0.45 of its potential returns per unit of risk. NIKE Inc is currently generating about -0.11 per unit of risk. If you would invest  124,000  in Metrogas SA on September 13, 2024 and sell it today you would earn a total of  164,500  from holding Metrogas SA or generate 132.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Metrogas SA  vs.  NIKE Inc

Metrogas SA

Risk-Adjusted Performance

35 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Metrogas SA are ranked lower than 35 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metrogas sustained solid returns over the last few months and may actually be approaching a breakup point.

NIKE Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIKE Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Metrogas and NIKE

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

The idea behind Metrogas SA and NIKE 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.