Correlation Between Makalot Industrial and Merida Industry
Can any of the company-specific risk be diversified away by investing in both Makalot Industrial and Merida Industry 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 Makalot Industrial and Merida Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Makalot Industrial Co and Merida Industry Co, you can compare the effects of market volatilities on Makalot Industrial and Merida Industry 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 Makalot Industrial with a short position of Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Makalot Industrial and Merida Industry.
Diversification Opportunities for Makalot Industrial and Merida Industry
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Makalot and Merida is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Makalot Industrial Co and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry and Makalot Industrial 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 Makalot Industrial Co are associated (or correlated) with Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Makalot Industrial i.e., Makalot Industrial and Merida Industry go up and down completely randomly.
Pair Corralation between Makalot Industrial and Merida Industry
Assuming the 90 days trading horizon Makalot Industrial Co is expected to generate 0.93 times more return on investment than Merida Industry. However, Makalot Industrial Co is 1.08 times less risky than Merida Industry. It trades about 0.05 of its potential returns per unit of risk. Merida Industry Co is currently generating about 0.01 per unit of risk. If you would invest 23,050 in Makalot Industrial Co on August 31, 2024 and sell it today you would earn a total of 9,000 from holding Makalot Industrial Co or generate 39.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Makalot Industrial Co vs. Merida Industry Co
Performance |
| Timeline |
| Makalot Industrial |
| Merida Industry |
Makalot Industrial and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Makalot Industrial and Merida Industry
The main advantage of trading using opposite Makalot Industrial and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Makalot Industrial position performs unexpectedly, Merida Industry 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 Merida Industry will offset losses from the drop in Merida Industry's long position.| Makalot Industrial vs. Chaintech Technology Corp | Makalot Industrial vs. AVerMedia Technologies | Makalot Industrial vs. Avision | Makalot Industrial vs. Clevo Co |
| Merida Industry vs. Chaintech Technology Corp | Merida Industry vs. AVerMedia Technologies | Merida Industry vs. Avision | Merida Industry vs. Clevo 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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