Correlation Between METTLER TOLEDO and ASOS PLC

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

By analyzing existing cross correlation between METTLER TOLEDO INTL and ASOS PLC, you can compare the effects of market volatilities on METTLER TOLEDO and ASOS PLC 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 METTLER TOLEDO with a short position of ASOS PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of METTLER TOLEDO and ASOS PLC.

Diversification Opportunities for METTLER TOLEDO and ASOS PLC

-0.55

Correlation Coefficient

METTLER TOLEDO  ASOS PLC

Excellent diversification

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

Pair Corralation between METTLER TOLEDO and ASOS PLC

Assuming the 90 days trading horizon METTLER TOLEDO INTL is expected to under-perform the ASOS PLC. But the stock apears to be less risky and, when comparing its historical volatility, METTLER TOLEDO INTL is 1.61 times less risky than ASOS PLC. The stock trades about -0.08 of its potential returns per unit of risk. The ASOS PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  409.00  in ASOS PLC on February 8, 2024 and sell it today you would earn a total of  8.00  from holding ASOS PLC or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

METTLER TOLEDO INTL  vs.  ASOS PLC

METTLER TOLEDO INTL

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in METTLER TOLEDO INTL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, METTLER TOLEDO is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ASOS PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ASOS PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, ASOS PLC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with METTLER TOLEDO and ASOS PLC

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

The idea behind METTLER TOLEDO INTL and ASOS PLC 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.