Correlation Between MetaLabs and TS Investment

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

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

Diversification Opportunities for MetaLabs and TS Investment

0.65

Correlation Coefficient

MetaLabs  TS Investment

Poor diversification

The 3 months correlation between MetaLabs and 246690 is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding MetaLabs Co and TS Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TS Investment Corp 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 TS Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TS Investment Corp has no effect on the direction of MetaLabs i.e., MetaLabs and TS Investment go up and down completely randomly.

Pair Corralation between MetaLabs and TS Investment

Assuming the 90 days trading horizon MetaLabs Co is expected to under-perform the TS Investment. But the stock apears to be less risky and, when comparing its historical volatility, MetaLabs Co is 1.49 times less risky than TS Investment. The stock trades about -0.14 of its potential returns per unit of risk. The TS Investment Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  104,800  in TS Investment Corp on September 30, 2024 and sell it today you would lose (14,400) from holding TS Investment Corp or give up 13.74% of portfolio value over 90 days.

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

MetaLabs Co  vs.  TS Investment Corp

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.

TS Investment Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TS Investment Corp 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 TS Investment

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

The idea behind MetaLabs Co and TS Investment Corp 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.