Correlation Between Merry Electronics and Auden Techno
Can any of the company-specific risk be diversified away by investing in both Merry Electronics and Auden Techno 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 Auden Techno 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 Auden Techno, you can compare the effects of market volatilities on Merry Electronics and Auden Techno 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 Auden Techno. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merry Electronics and Auden Techno.
Diversification Opportunities for Merry Electronics and Auden Techno
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merry and Auden is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merry Electronics Co and Auden Techno in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auden Techno 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 Auden Techno. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auden Techno has no effect on the direction of Merry Electronics i.e., Merry Electronics and Auden Techno go up and down completely randomly.
Pair Corralation between Merry Electronics and Auden Techno
Assuming the 90 days trading horizon Merry Electronics Co is expected to generate 0.99 times more return on investment than Auden Techno. However, Merry Electronics Co is 1.02 times less risky than Auden Techno. It trades about 0.01 of its potential returns per unit of risk. Auden Techno is currently generating about -0.05 per unit of risk. If you would invest 10,650 in Merry Electronics Co on September 14, 2024 and sell it today you would lose (50.00) from holding Merry Electronics Co or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Merry Electronics Co vs. Auden Techno
Performance |
| Timeline |
| Merry Electronics |
| Auden Techno |
Merry Electronics and Auden Techno Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merry Electronics and Auden Techno
The main advantage of trading using opposite Merry Electronics and Auden Techno positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merry Electronics position performs unexpectedly, Auden Techno 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 Auden Techno will offset losses from the drop in Auden Techno's long position.| Merry Electronics vs. Oceanic Beverages Co | Merry Electronics vs. APEX International Financial | Merry Electronics vs. STARLUX Airlines Co | Merry Electronics vs. First Insurance Co |
| Auden Techno vs. CyberTAN Technology | Auden Techno vs. Merry Electronics Co | Auden Techno vs. Unizyx Holding Corp | Auden Techno vs. Microelectronics Technology |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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