Correlation Between Metro Investment and Vanfund Urban

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

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

Diversification Opportunities for Metro Investment and Vanfund Urban

0.75

Correlation Coefficient

Metro Investment  Vanfund Urban

Poor diversification

The 3 months correlation between Metro and Vanfund is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Metro Investment Development and Vanfund Urban Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanfund Urban Investment and Metro Investment 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 Metro Investment Development are associated (or correlated) with Vanfund Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanfund Urban Investment has no effect on the direction of Metro Investment i.e., Metro Investment and Vanfund Urban go up and down completely randomly.

Pair Corralation between Metro Investment and Vanfund Urban

Assuming the 90 days trading horizon Metro Investment is expected to generate 1.49 times less return on investment than Vanfund Urban. But when comparing it to its historical volatility, Metro Investment Development is 1.03 times less risky than Vanfund Urban. It trades about 0.15 of its potential returns per unit of risk. Vanfund Urban Investment is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  369.00  in Vanfund Urban Investment on September 3, 2024 and sell it today you would earn a total of  188.00  from holding Vanfund Urban Investment or generate 50.95% return on investment over 90 days.

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

Metro Investment Development  vs.  Vanfund Urban Investment

Metro Investment Dev

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Investment Development are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metro Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Vanfund Urban Investment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vanfund Urban Investment are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vanfund Urban sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Metro Investment and Vanfund Urban

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

The idea behind Metro Investment Development and Vanfund Urban Investment 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.