Correlation Between CSB Bank and Metropolis Healthcare

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

By analyzing existing cross correlation between CSB Bank Limited and Metropolis Healthcare Limited, you can compare the effects of market volatilities on CSB Bank and Metropolis Healthcare 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 CSB Bank with a short position of Metropolis Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSB Bank and Metropolis Healthcare.

Diversification Opportunities for CSB Bank and Metropolis Healthcare

0.77

Correlation Coefficient

CSB Bank  Metropolis Healthcare

Poor diversification

The 3 months correlation between CSB and Metropolis is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CSB Bank Limited and Metropolis Healthcare Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metropolis Healthcare and CSB Bank 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 CSB Bank Limited are associated (or correlated) with Metropolis Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metropolis Healthcare has no effect on the direction of CSB Bank i.e., CSB Bank and Metropolis Healthcare go up and down completely randomly.

Pair Corralation between CSB Bank and Metropolis Healthcare

Assuming the 90 days trading horizon CSB Bank Limited is expected to generate 0.7 times more return on investment than Metropolis Healthcare. However, CSB Bank Limited is 1.43 times less risky than Metropolis Healthcare. It trades about 0.18 of its potential returns per unit of risk. Metropolis Healthcare Limited is currently generating about 0.08 per unit of risk. If you would invest  35,945  in CSB Bank Limited on April 23, 2025 and sell it today you would earn a total of  6,295  from holding CSB Bank Limited or generate 17.51% return on investment over 90 days.

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

CSB Bank Limited  vs.  Metropolis Healthcare Limited

CSB Bank Limited

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CSB Bank Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, CSB Bank disclosed solid returns over the last few months and may actually be approaching a breakup point.

Metropolis Healthcare

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolis Healthcare Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting essential indicators, Metropolis Healthcare may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with CSB Bank and Metropolis Healthcare

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

The idea behind CSB Bank Limited and Metropolis Healthcare Limited 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.