Correlation Between Metro Pacific and Sumitomo Corp

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

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

Diversification Opportunities for Metro Pacific and Sumitomo Corp

-0.73

Correlation Coefficient

Metro Pacific  Sumitomo Corp

Pay attention - limited upside

The 3 months correlation between Metro and Sumitomo is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Metro Pacific Investments and Sumitomo Corp ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Corp ADR and Metro Pacific 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 Metro Pacific Investments are associated (or correlated) with Sumitomo Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Corp ADR has no effect on the direction of Metro Pacific i.e., Metro Pacific and Sumitomo Corp go up and down completely randomly.

Pair Corralation between Metro Pacific and Sumitomo Corp

If you would invest  2,111  in Sumitomo Corp ADR on September 3, 2024 and sell it today you would earn a total of  35.00  from holding Sumitomo Corp ADR or generate 1.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	5.0%
Values	Daily Returns

Metro Pacific Investments  vs.  Sumitomo Corp ADR

Metro Pacific Investments

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metro Pacific Investments has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Metro Pacific is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Sumitomo Corp ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sumitomo Corp ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Metro Pacific and Sumitomo Corp

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

The idea behind Metro Pacific Investments and Sumitomo Corp ADR 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.