Correlation Between Oceanic Beverages and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both Oceanic Beverages and Merry Electronics 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 Oceanic Beverages and Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanic Beverages Co and Merry Electronics Co, you can compare the effects of market volatilities on Oceanic Beverages and Merry Electronics 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 Oceanic Beverages with a short position of Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanic Beverages and Merry Electronics.
Diversification Opportunities for Oceanic Beverages and Merry Electronics
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Oceanic and Merry is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Oceanic Beverages Co and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics and Oceanic Beverages 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 Oceanic Beverages Co are associated (or correlated) with Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of Oceanic Beverages i.e., Oceanic Beverages and Merry Electronics go up and down completely randomly.
Pair Corralation between Oceanic Beverages and Merry Electronics
Assuming the 90 days trading horizon Oceanic Beverages Co is expected to generate 0.98 times more return on investment than Merry Electronics. However, Oceanic Beverages Co is 1.02 times less risky than Merry Electronics. It trades about 0.18 of its potential returns per unit of risk. Merry Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 715.00 in Oceanic Beverages Co on September 1, 2024 and sell it today you would earn a total of 485.00 from holding Oceanic Beverages Co or generate 67.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Oceanic Beverages Co vs. Merry Electronics Co
Performance |
| Timeline |
| Oceanic Beverages |
| Merry Electronics |
Oceanic Beverages and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanic Beverages and Merry Electronics
The main advantage of trading using opposite Oceanic Beverages and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanic Beverages position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.| Oceanic Beverages vs. De Licacy Industrial | Oceanic Beverages vs. Wisher Industrial Co | Oceanic Beverages vs. Tainan Enterprises Co |
Check out your portfolio center.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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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