Correlation Between Chicony Electronics and Merida Industry
Can any of the company-specific risk be diversified away by investing in both Chicony Electronics 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 Chicony Electronics and Merida Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chicony Electronics Co and Merida Industry Co, you can compare the effects of market volatilities on Chicony Electronics 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 Chicony Electronics with a short position of Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chicony Electronics and Merida Industry.
Diversification Opportunities for Chicony Electronics and Merida Industry
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Chicony and Merida is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Chicony Electronics 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 Chicony Electronics 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 Chicony Electronics 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 Chicony Electronics i.e., Chicony Electronics and Merida Industry go up and down completely randomly.
Pair Corralation between Chicony Electronics and Merida Industry
Assuming the 90 days trading horizon Chicony Electronics Co is expected to generate 0.94 times more return on investment than Merida Industry. However, Chicony Electronics Co is 1.06 times less risky than Merida Industry. It trades about -0.01 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 17,650 in Chicony Electronics Co on September 2, 2024 and sell it today you would lose (1,950) from holding Chicony Electronics Co or give up 11.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chicony Electronics Co vs. Merida Industry Co
Performance |
| Timeline |
| Chicony Electronics |
| Merida Industry |
Chicony Electronics and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chicony Electronics and Merida Industry
The main advantage of trading using opposite Chicony Electronics and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chicony Electronics 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.The idea behind Chicony Electronics Co and Merida Industry Co 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.| Merida Industry vs. Giant Manufacturing Co | Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Feng Tay Enterprises | Merida Industry vs. President Chain Store |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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