Correlation Between Sentronic International and MetaTech

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

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

Diversification Opportunities for Sentronic International and MetaTech

-0.58

Correlation Coefficient

Sentronic International  MetaTech

Excellent diversification

The 3 months correlation between Sentronic and MetaTech is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sentronic International and MetaTech AP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaTech AP and Sentronic International 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 Sentronic International are associated (or correlated) with MetaTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaTech AP has no effect on the direction of Sentronic International i.e., Sentronic International and MetaTech go up and down completely randomly.

Pair Corralation between Sentronic International and MetaTech

Assuming the 90 days trading horizon Sentronic International is expected to under-perform the MetaTech. In addition to that, Sentronic International is 2.77 times more volatile than MetaTech AP. It trades about -0.21 of its total potential returns per unit of risk. MetaTech AP is currently generating about 0.23 per unit of volatility. If you would invest  4,890  in MetaTech AP on September 21, 2024 and sell it today you would earn a total of  250.00  from holding MetaTech AP or generate 5.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Sentronic International  vs.  MetaTech AP

Sentronic International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sentronic International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

MetaTech AP

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MetaTech AP are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, MetaTech is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Sentronic International and MetaTech

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

The idea behind Sentronic International and MetaTech AP 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.