Correlation Between METISA Metalrgica and Charter Communications

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

By analyzing existing cross correlation between METISA Metalrgica Timboense and Charter Communications, you can compare the effects of market volatilities on METISA Metalrgica and Charter Communications 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 METISA Metalrgica with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of METISA Metalrgica and Charter Communications.

Diversification Opportunities for METISA Metalrgica and Charter Communications

-0.55

Correlation Coefficient

METISA Metalrgica  Charter Communications

Excellent diversification

The 3 months correlation between METISA and Charter is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding METISA Metalrgica Timboense and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and METISA Metalrgica 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 METISA Metalrgica Timboense are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of METISA Metalrgica i.e., METISA Metalrgica and Charter Communications go up and down completely randomly.

Pair Corralation between METISA Metalrgica and Charter Communications

Assuming the 90 days trading horizon METISA Metalrgica Timboense is expected to under-perform the Charter Communications. But the preferred stock apears to be less risky and, when comparing its historical volatility, METISA Metalrgica Timboense is 1.19 times less risky than Charter Communications. The preferred stock trades about -0.1 of its potential returns per unit of risk. The Charter Communications is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,249  in Charter Communications on September 3, 2024 and sell it today you would earn a total of  733.00  from holding Charter Communications or generate 22.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

METISA Metalrgica Timboense  vs.  Charter Communications

METISA Metalrgica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days METISA Metalrgica Timboense has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Charter Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Charter Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with METISA Metalrgica and Charter Communications

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

The idea behind METISA Metalrgica Timboense and Charter Communications 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.