Correlation Between Shenzhen Expressway and MetLife

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

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

Diversification Opportunities for Shenzhen Expressway and MetLife

-0.7

Correlation Coefficient

Shenzhen Expressway  MetLife

Excellent diversification

The 3 months correlation between Shenzhen and MetLife is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Expressway and MetLife in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetLife and Shenzhen Expressway 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 Shenzhen Expressway are associated (or correlated) with MetLife. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetLife has no effect on the direction of Shenzhen Expressway i.e., Shenzhen Expressway and MetLife go up and down completely randomly.

Pair Corralation between Shenzhen Expressway and MetLife

Assuming the 90 days horizon Shenzhen Expressway is expected to under-perform the MetLife. But the pink sheet apears to be less risky and, when comparing its historical volatility, Shenzhen Expressway is 1.55 times less risky than MetLife. The pink sheet trades about -0.13 of its potential returns per unit of risk. The MetLife is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  7,604  in MetLife on September 5, 2024 and sell it today you would earn a total of  934.00  from holding MetLife or generate 12.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Shenzhen Expressway  vs.  MetLife

Shenzhen Expressway

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenzhen Expressway has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

MetLife

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MetLife are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting technical and fundamental indicators, MetLife may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Shenzhen Expressway and MetLife

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

The idea behind Shenzhen Expressway and MetLife 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.