Correlation Between Meiloon Industrial and Feng Ching
Can any of the company-specific risk be diversified away by investing in both Meiloon Industrial and Feng Ching 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 Meiloon Industrial and Feng Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meiloon Industrial Co and Feng Ching Metal, you can compare the effects of market volatilities on Meiloon Industrial and Feng Ching 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 Meiloon Industrial with a short position of Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiloon Industrial and Feng Ching.
Diversification Opportunities for Meiloon Industrial and Feng Ching
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meiloon and Feng is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Meiloon Industrial Co and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal and Meiloon Industrial 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 Meiloon Industrial Co are associated (or correlated) with Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of Meiloon Industrial i.e., Meiloon Industrial and Feng Ching go up and down completely randomly.
Pair Corralation between Meiloon Industrial and Feng Ching
Assuming the 90 days trading horizon Meiloon Industrial Co is expected to generate 1.38 times more return on investment than Feng Ching. However, Meiloon Industrial is 1.38 times more volatile than Feng Ching Metal. It trades about 0.09 of its potential returns per unit of risk. Feng Ching Metal is currently generating about -0.02 per unit of risk. If you would invest 2,190 in Meiloon Industrial Co on September 5, 2024 and sell it today you would earn a total of 855.00 from holding Meiloon Industrial Co or generate 39.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiloon Industrial Co vs. Feng Ching Metal
Performance |
| Timeline |
| Meiloon Industrial |
| Feng Ching Metal |
Meiloon Industrial and Feng Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiloon Industrial and Feng Ching
The main advantage of trading using opposite Meiloon Industrial and Feng Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiloon Industrial position performs unexpectedly, Feng Ching 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 Feng Ching will offset losses from the drop in Feng Ching's long position.| Meiloon Industrial vs. Hanpin Electron Co | Meiloon Industrial vs. Stark Technology | Meiloon Industrial vs. Ichia Technologies | Meiloon Industrial vs. Zinwell |
| Feng Ching vs. Eclat Textile Co | Feng Ching vs. WiseChip Semiconductor | Feng Ching vs. Novatek Microelectronics Corp | Feng Ching vs. Leader Electronics |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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