Correlation Between Oil Natural and Metropolis Healthcare

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

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

Diversification Opportunities for Oil Natural and Metropolis Healthcare

0.24

Correlation Coefficient

Oil Natural  Metropolis Healthcare

Modest diversification

The 3 months correlation between Oil and Metropolis is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Metropolis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolis Healthcare and Oil Natural 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 Oil Natural Gas 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 Oil Natural i.e., Oil Natural and Metropolis Healthcare go up and down completely randomly.

Pair Corralation between Oil Natural and Metropolis Healthcare

Assuming the 90 days trading horizon Oil Natural Gas is expected to under-perform the Metropolis Healthcare. In addition to that, Oil Natural is 1.19 times more volatile than Metropolis Healthcare Limited. It trades about -0.05 of its total potential returns per unit of risk. Metropolis Healthcare Limited is currently generating about -0.04 per unit of volatility. If you would invest  206,820  in Metropolis Healthcare Limited on October 22, 2024 and sell it today you would lose (17,750) from holding Metropolis Healthcare Limited or give up 8.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.19%
Values	Daily Returns

Oil Natural Gas  vs.  Metropolis Healthcare Limited

Oil Natural Gas

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oil Natural Gas are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Oil Natural is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Metropolis Healthcare

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Oil Natural and Metropolis Healthcare

The main advantage of trading using opposite Oil Natural and Metropolis Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Natural 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 Oil Natural Gas 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.