Correlation Between Meiloon Industrial and Elite Material
Can any of the company-specific risk be diversified away by investing in both Meiloon Industrial and Elite Material 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 Elite Material 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 Elite Material Co, you can compare the effects of market volatilities on Meiloon Industrial and Elite Material 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 Elite Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiloon Industrial and Elite Material.
Diversification Opportunities for Meiloon Industrial and Elite Material
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meiloon and Elite is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Meiloon Industrial Co and Elite Material Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Material 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 Elite Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Material has no effect on the direction of Meiloon Industrial i.e., Meiloon Industrial and Elite Material go up and down completely randomly.
Pair Corralation between Meiloon Industrial and Elite Material
Assuming the 90 days trading horizon Meiloon Industrial Co is expected to generate 1.91 times more return on investment than Elite Material. However, Meiloon Industrial is 1.91 times more volatile than Elite Material Co. It trades about 0.05 of its potential returns per unit of risk. Elite Material Co is currently generating about 0.06 per unit of risk. If you would invest 3,000 in Meiloon Industrial Co on August 30, 2024 and sell it today you would earn a total of 165.00 from holding Meiloon Industrial Co or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiloon Industrial Co vs. Elite Material Co
Performance |
| Timeline |
| Meiloon Industrial |
| Elite Material |
Meiloon Industrial and Elite Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiloon Industrial and Elite Material
The main advantage of trading using opposite Meiloon Industrial and Elite Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiloon Industrial position performs unexpectedly, Elite Material 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 Elite Material will offset losses from the drop in Elite Material's long position.| Meiloon Industrial vs. Yulon Finance Corp | Meiloon Industrial vs. Taiwan Secom Co | Meiloon Industrial vs. Great Wall Enterprise |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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