Correlation Between STI Education and Metro Retail

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

By analyzing existing cross correlation between STI Education Systems and Metro Retail Stores, you can compare the effects of market volatilities on STI Education and Metro Retail 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 STI Education with a short position of Metro Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of STI Education and Metro Retail.

Diversification Opportunities for STI Education and Metro Retail

-0.69

Correlation Coefficient

STI Education  Metro Retail

Excellent diversification

The 3 months correlation between STI and Metro is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding STI Education Systems and Metro Retail Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Retail Stores and STI Education 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 STI Education Systems are associated (or correlated) with Metro Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Retail Stores has no effect on the direction of STI Education i.e., STI Education and Metro Retail go up and down completely randomly.

Pair Corralation between STI Education and Metro Retail

Assuming the 90 days trading horizon STI Education Systems is expected to generate 1.67 times more return on investment than Metro Retail. However, STI Education is 1.67 times more volatile than Metro Retail Stores. It trades about 0.08 of its potential returns per unit of risk. Metro Retail Stores is currently generating about -0.05 per unit of risk. If you would invest  126.00  in STI Education Systems on April 22, 2025 and sell it today you would earn a total of  16.00  from holding STI Education Systems or generate 12.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

STI Education Systems  vs.  Metro Retail Stores

STI Education Systems

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STI Education Systems are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, STI Education exhibited solid returns over the last few months and may actually be approaching a breakup point.

Metro Retail Stores

Risk-Adjusted Performance

Very Weak

Over the last 90 days Metro Retail Stores has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Metro Retail is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with STI Education and Metro Retail

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

The idea behind STI Education Systems and Metro Retail Stores 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.