Correlation Between Semirara Mining and Metropolitan Bank

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

By analyzing existing cross correlation between Semirara Mining Corp and Metropolitan Bank Trust, you can compare the effects of market volatilities on Semirara Mining and Metropolitan Bank 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 Semirara Mining with a short position of Metropolitan Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semirara Mining and Metropolitan Bank.

Diversification Opportunities for Semirara Mining and Metropolitan Bank

-0.66

Correlation Coefficient

Semirara Mining  Metropolitan Bank

Excellent diversification

The 3 months correlation between Semirara and Metropolitan is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Semirara Mining Corp and Metropolitan Bank Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolitan Bank Trust and Semirara Mining 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 Semirara Mining Corp are associated (or correlated) with Metropolitan Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolitan Bank Trust has no effect on the direction of Semirara Mining i.e., Semirara Mining and Metropolitan Bank go up and down completely randomly.

Pair Corralation between Semirara Mining and Metropolitan Bank

Assuming the 90 days trading horizon Semirara Mining Corp is expected to generate 0.6 times more return on investment than Metropolitan Bank. However, Semirara Mining Corp is 1.68 times less risky than Metropolitan Bank. It trades about 0.24 of its potential returns per unit of risk. Metropolitan Bank Trust is currently generating about -0.03 per unit of risk. If you would invest  3,200  in Semirara Mining Corp on November 28, 2024 and sell it today you would earn a total of  545.00  from holding Semirara Mining Corp or generate 17.03% return on investment over 90 days.

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

Semirara Mining Corp  vs.  Metropolitan Bank Trust

Semirara Mining Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Semirara Mining Corp are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Semirara Mining exhibited solid returns over the last few months and may actually be approaching a breakup point.

Metropolitan Bank Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metropolitan Bank Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Metropolitan Bank is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Semirara Mining and Metropolitan Bank

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

The idea behind Semirara Mining Corp and Metropolitan Bank Trust 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.