Correlation Between MetaLabs and DB Insurance

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

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

Diversification Opportunities for MetaLabs and DB Insurance

0.66

Correlation Coefficient

MetaLabs  DB Insurance

Poor diversification

The 3 months correlation between MetaLabs and 005830 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding MetaLabs Co and DB Insurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DB Insurance and MetaLabs 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 MetaLabs Co are associated (or correlated) with DB Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DB Insurance has no effect on the direction of MetaLabs i.e., MetaLabs and DB Insurance go up and down completely randomly.

Pair Corralation between MetaLabs and DB Insurance

Assuming the 90 days trading horizon MetaLabs Co is expected to under-perform the DB Insurance. In addition to that, MetaLabs is 1.55 times more volatile than DB Insurance Co. It trades about -0.03 of its total potential returns per unit of risk. DB Insurance Co is currently generating about 0.07 per unit of volatility. If you would invest  5,575,021  in DB Insurance Co on September 3, 2024 and sell it today you would earn a total of  5,344,979  from holding DB Insurance Co or generate 95.87% return on investment over 90 days.

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

MetaLabs Co  vs.  DB Insurance Co

MetaLabs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetaLabs Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

DB Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DB Insurance Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MetaLabs and DB Insurance

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

The idea behind MetaLabs Co and DB Insurance Co 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.