Correlation Between Metropolis Healthcare and Oriental Hotels

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

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

Diversification Opportunities for Metropolis Healthcare and Oriental Hotels

0.03

Correlation Coefficient

Metropolis Healthcare  Oriental Hotels

Significant diversification

The 3 months correlation between Metropolis and Oriental is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Metropolis Healthcare Limited and Oriental Hotels Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Hotels and Metropolis Healthcare 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 Metropolis Healthcare Limited are associated (or correlated) with Oriental Hotels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Hotels has no effect on the direction of Metropolis Healthcare i.e., Metropolis Healthcare and Oriental Hotels go up and down completely randomly.

Pair Corralation between Metropolis Healthcare and Oriental Hotels

Assuming the 90 days trading horizon Metropolis Healthcare Limited is expected to generate 0.76 times more return on investment than Oriental Hotels. However, Metropolis Healthcare Limited is 1.32 times less risky than Oriental Hotels. It trades about 0.15 of its potential returns per unit of risk. Oriental Hotels Limited is currently generating about 0.04 per unit of risk. If you would invest  168,330  in Metropolis Healthcare Limited on May 7, 2025 and sell it today you would earn a total of  35,730  from holding Metropolis Healthcare Limited or generate 21.23% return on investment over 90 days.

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

Metropolis Healthcare Limited  vs.  Oriental Hotels Limited

Metropolis Healthcare

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Metropolis Healthcare Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Metropolis Healthcare displayed solid returns over the last few months and may actually be approaching a breakup point.

Oriental Hotels

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oriental Hotels Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain technical indicators, Oriental Hotels may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Metropolis Healthcare and Oriental Hotels

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

The idea behind Metropolis Healthcare Limited and Oriental Hotels 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.