Correlation Between MetaLabs and LEENO Industrial

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

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

Diversification Opportunities for MetaLabs and LEENO Industrial

0.84

Correlation Coefficient

MetaLabs  LEENO Industrial

Very poor diversification

The 3 months correlation between MetaLabs and LEENO is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding MetaLabs Co and LEENO Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEENO Industrial 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 LEENO Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEENO Industrial has no effect on the direction of MetaLabs i.e., MetaLabs and LEENO Industrial go up and down completely randomly.

Pair Corralation between MetaLabs and LEENO Industrial

Assuming the 90 days trading horizon MetaLabs Co is expected to under-perform the LEENO Industrial. But the stock apears to be less risky and, when comparing its historical volatility, MetaLabs Co is 1.2 times less risky than LEENO Industrial. The stock trades about -0.15 of its potential returns per unit of risk. The LEENO Industrial is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  18,170,000  in LEENO Industrial on September 12, 2024 and sell it today you would lose (2,590,000) from holding LEENO Industrial or give up 14.25% of portfolio value over 90 days.

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

MetaLabs Co  vs.  LEENO Industrial

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.

LEENO Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LEENO Industrial 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.

Pair Trading with MetaLabs and LEENO Industrial

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

The idea behind MetaLabs Co and LEENO Industrial 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.