Correlation Between Metalert and AdvanceTC

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

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

Diversification Opportunities for Metalert and AdvanceTC

-0.03

Correlation Coefficient

Metalert  AdvanceTC

Good diversification

The 3 months correlation between Metalert and AdvanceTC is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Metalert and AdvanceTC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvanceTC Limited and Metalert 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 Metalert are associated (or correlated) with AdvanceTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvanceTC Limited has no effect on the direction of Metalert i.e., Metalert and AdvanceTC go up and down completely randomly.

Pair Corralation between Metalert and AdvanceTC

Given the investment horizon of 90 days Metalert is expected to generate 1.06 times more return on investment than AdvanceTC. However, Metalert is 1.06 times more volatile than AdvanceTC Limited. It trades about 0.14 of its potential returns per unit of risk. AdvanceTC Limited is currently generating about 0.05 per unit of risk. If you would invest  2.60  in Metalert on September 3, 2024 and sell it today you would earn a total of  2.40  from holding Metalert or generate 92.31% return on investment over 90 days.

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

Metalert  vs.  AdvanceTC Limited

Metalert

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metalert are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Metalert unveiled solid returns over the last few months and may actually be approaching a breakup point.

AdvanceTC Limited

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AdvanceTC Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating essential indicators, AdvanceTC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metalert and AdvanceTC

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

The idea behind Metalert and AdvanceTC Limited 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.