Correlation Between Merry Electronics and E Lead
Can any of the company-specific risk be diversified away by investing in both Merry Electronics and E Lead 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 E Lead 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 E Lead Electronic Co, you can compare the effects of market volatilities on Merry Electronics and E Lead 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 E Lead. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merry Electronics and E Lead.
Diversification Opportunities for Merry Electronics and E Lead
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Merry and 2497 is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Merry Electronics Co and E Lead Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Lead Electronic 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 E Lead. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Lead Electronic has no effect on the direction of Merry Electronics i.e., Merry Electronics and E Lead go up and down completely randomly.
Pair Corralation between Merry Electronics and E Lead
Assuming the 90 days trading horizon Merry Electronics Co is expected to generate 0.82 times more return on investment than E Lead. However, Merry Electronics Co is 1.22 times less risky than E Lead. It trades about 0.03 of its potential returns per unit of risk. E Lead Electronic Co is currently generating about -0.01 per unit of risk. If you would invest 8,890 in Merry Electronics Co on August 26, 2024 and sell it today you would earn a total of 2,010 from holding Merry Electronics Co or generate 22.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merry Electronics Co vs. E Lead Electronic Co
Performance |
| Timeline |
| Merry Electronics |
| E Lead Electronic |
Merry Electronics and E Lead Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merry Electronics and E Lead
The main advantage of trading using opposite Merry Electronics and E Lead positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merry Electronics position performs unexpectedly, E Lead 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 E Lead will offset losses from the drop in E Lead's long position.| Merry Electronics vs. Hunya Foods Co | Merry Electronics vs. Cathay Financial Holding | Merry Electronics vs. Asustek Computer | Merry Electronics vs. Taiwan Cooperative Financial |
| E Lead vs. Weltrend Semiconductor | E Lead vs. Catcher Technology Co | E Lead vs. Cub Elecparts | E Lead vs. Elan Microelectronics Corp |
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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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