Correlation Between Merry Electronics and Hung Sheng
Can any of the company-specific risk be diversified away by investing in both Merry Electronics and Hung Sheng 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 Hung Sheng 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 Hung Sheng Construction, you can compare the effects of market volatilities on Merry Electronics and Hung Sheng 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 Hung Sheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merry Electronics and Hung Sheng.
Diversification Opportunities for Merry Electronics and Hung Sheng
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Merry and Hung is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Merry Electronics Co and Hung Sheng Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Sheng Construction 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 Hung Sheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Sheng Construction has no effect on the direction of Merry Electronics i.e., Merry Electronics and Hung Sheng go up and down completely randomly.
Pair Corralation between Merry Electronics and Hung Sheng
Assuming the 90 days trading horizon Merry Electronics Co is expected to under-perform the Hung Sheng. In addition to that, Merry Electronics is 1.26 times more volatile than Hung Sheng Construction. It trades about -0.08 of its total potential returns per unit of risk. Hung Sheng Construction is currently generating about 0.04 per unit of volatility. If you would invest 2,600 in Hung Sheng Construction on August 26, 2024 and sell it today you would earn a total of 25.00 from holding Hung Sheng Construction or generate 0.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merry Electronics Co vs. Hung Sheng Construction
Performance |
| Timeline |
| Merry Electronics |
| Hung Sheng Construction |
Merry Electronics and Hung Sheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merry Electronics and Hung Sheng
The main advantage of trading using opposite Merry Electronics and Hung Sheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merry Electronics position performs unexpectedly, Hung Sheng 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 Hung Sheng will offset losses from the drop in Hung Sheng's long position.| Merry Electronics vs. Hung Sheng Construction | Merry Electronics vs. Ruentex Engineering Construction | Merry Electronics vs. TECO Electric Machinery | Merry Electronics vs. China Construction Bank |
| Hung Sheng vs. Chainqui Construction Development | Hung Sheng vs. Kee Tai Properties | Hung Sheng vs. BES Engineering Co | Hung Sheng 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 Stocks Directory module to find actively traded stocks across global markets.
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