Correlation Between SiS Distribution and Metro Systems

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

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

Diversification Opportunities for SiS Distribution and Metro Systems

-0.29

Correlation Coefficient

SiS Distribution  Metro Systems

Very good diversification

The 3 months correlation between SiS and Metro is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding SiS Distribution Public and Metro Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Systems and SiS Distribution 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 SiS Distribution Public are associated (or correlated) with Metro Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Systems has no effect on the direction of SiS Distribution i.e., SiS Distribution and Metro Systems go up and down completely randomly.

Pair Corralation between SiS Distribution and Metro Systems

Assuming the 90 days trading horizon SiS Distribution Public is expected to generate 1.0 times more return on investment than Metro Systems. However, SiS Distribution is 1.0 times more volatile than Metro Systems. It trades about 0.04 of its potential returns per unit of risk. Metro Systems is currently generating about 0.04 per unit of risk. If you would invest  2,349  in SiS Distribution Public on September 14, 2024 and sell it today you would earn a total of  526.00  from holding SiS Distribution Public or generate 22.39% return on investment over 90 days.

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

SiS Distribution Public  vs.  Metro Systems

SiS Distribution Public

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SiS Distribution Public are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, SiS Distribution may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Metro Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Metro Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Metro Systems is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with SiS Distribution and Metro Systems

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

The idea behind SiS Distribution Public and Metro Systems 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.