Correlation Between MRF and Metropolis Healthcare

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

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

Diversification Opportunities for MRF and Metropolis Healthcare

0.93

Correlation Coefficient

MRF  Metropolis Healthcare

Almost no diversification

The 3 months correlation between MRF and Metropolis is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding MRF Limited and Metropolis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolis Healthcare and MRF 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 MRF Limited are associated (or correlated) with Metropolis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolis Healthcare has no effect on the direction of MRF i.e., MRF and Metropolis Healthcare go up and down completely randomly.

Pair Corralation between MRF and Metropolis Healthcare

Assuming the 90 days trading horizon MRF Limited is expected to generate 0.62 times more return on investment than Metropolis Healthcare. However, MRF Limited is 1.61 times less risky than Metropolis Healthcare. It trades about -0.25 of its potential returns per unit of risk. Metropolis Healthcare Limited is currently generating about -0.24 per unit of risk. If you would invest  12,558,200  in MRF Limited on December 3, 2024 and sell it today you would lose (2,041,200) from holding MRF Limited or give up 16.25% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.88%
Values	Daily Returns

MRF Limited  vs.  Metropolis Healthcare Limited

MRF Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days MRF Limited 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Metropolis Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metropolis Healthcare Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with MRF and Metropolis Healthcare

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

The idea behind MRF Limited and Metropolis Healthcare 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.