Correlation Between Cleanaway Waste and Metro AG

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

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

Diversification Opportunities for Cleanaway Waste and Metro AG

0.26

Correlation Coefficient

Cleanaway Waste  Metro AG

Modest diversification

The 3 months correlation between Cleanaway and Metro is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Cleanaway Waste Management and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG and Cleanaway Waste 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 Cleanaway Waste Management are associated (or correlated) with Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Cleanaway Waste i.e., Cleanaway Waste and Metro AG go up and down completely randomly.

Pair Corralation between Cleanaway Waste and Metro AG

Assuming the 90 days trading horizon Cleanaway Waste Management is expected to generate 0.65 times more return on investment than Metro AG. However, Cleanaway Waste Management is 1.53 times less risky than Metro AG. It trades about -0.04 of its potential returns per unit of risk. Metro AG is currently generating about -0.06 per unit of risk. If you would invest  168.00  in Cleanaway Waste Management on October 10, 2024 and sell it today you would lose (8.00) from holding Cleanaway Waste Management or give up 4.76% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	76.32%
Values	Daily Returns

Cleanaway Waste Management  vs.  Metro AG

Cleanaway Waste Mana

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cleanaway Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Metro AG

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cleanaway Waste and Metro AG

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

The idea behind Cleanaway Waste Management and Metro AG 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 Global Correlations module to find global opportunities by holding instruments from different markets.