Correlation Between Merry Electronics and Audix Corp
Can any of the company-specific risk be diversified away by investing in both Merry Electronics and Audix Corp 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 Merry Electronics and Audix Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merry Electronics Co and Audix Corp, you can compare the effects of market volatilities on Merry Electronics and Audix Corp 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 Merry Electronics with a short position of Audix Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merry Electronics and Audix Corp.
Diversification Opportunities for Merry Electronics and Audix Corp
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Merry and Audix is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Merry Electronics Co and Audix Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Audix Corp and Merry 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 Merry Electronics Co are associated (or correlated) with Audix Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Audix Corp has no effect on the direction of Merry Electronics i.e., Merry Electronics and Audix Corp go up and down completely randomly.
Pair Corralation between Merry Electronics and Audix Corp
Assuming the 90 days trading horizon Merry Electronics Co is expected to under-perform the Audix Corp. In addition to that, Merry Electronics is 3.85 times more volatile than Audix Corp. It trades about -0.07 of its total potential returns per unit of risk. Audix Corp is currently generating about -0.05 per unit of volatility. If you would invest 7,090 in Audix Corp on September 4, 2024 and sell it today you would lose (40.00) from holding Audix Corp or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merry Electronics Co vs. Audix Corp
Performance |
| Timeline |
| Merry Electronics |
| Audix Corp |
Merry Electronics and Audix Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merry Electronics and Audix Corp
The main advantage of trading using opposite Merry Electronics and Audix Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merry Electronics position performs unexpectedly, Audix Corp 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 Audix Corp will offset losses from the drop in Audix Corp's long position.| Merry Electronics vs. Taiwan Semiconductor Manufacturing | Merry Electronics vs. Yang Ming Marine | Merry Electronics vs. AU Optronics | Merry Electronics vs. Innolux Corp |
| Audix Corp vs. Stark Technology | Audix Corp vs. Elan Microelectronics Corp | Audix Corp vs. Greatek Electronics | Audix Corp vs. Zinwell |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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