Correlation Between E Lead and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both E Lead and Merry Electronics 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 E Lead and Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between E Lead Electronic Co and Merry Electronics Co, you can compare the effects of market volatilities on E Lead and Merry Electronics 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 E Lead with a short position of Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of E Lead and Merry Electronics.
Diversification Opportunities for E Lead and Merry Electronics
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 2497 and Merry is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding E Lead Electronic Co and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics and E Lead 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 E Lead Electronic Co are associated (or correlated) with Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of E Lead i.e., E Lead and Merry Electronics go up and down completely randomly.
Pair Corralation between E Lead and Merry Electronics
Assuming the 90 days trading horizon E Lead Electronic Co is expected to under-perform the Merry Electronics. In addition to that, E Lead is 1.22 times more volatile than Merry Electronics Co. It trades about -0.01 of its total potential returns per unit of risk. Merry Electronics Co is currently generating about 0.03 per unit of volatility. 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 |
E Lead Electronic Co vs. Merry Electronics Co
Performance |
| Timeline |
| E Lead Electronic |
| Merry Electronics |
E Lead and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with E Lead and Merry Electronics
The main advantage of trading using opposite E Lead and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if E Lead position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.| E Lead vs. Weltrend Semiconductor | E Lead vs. Catcher Technology Co | E Lead vs. Cub Elecparts | E Lead vs. Elan Microelectronics Corp |
| Merry Electronics vs. Hunya Foods Co | Merry Electronics vs. Cathay Financial Holding | Merry Electronics vs. Asustek Computer | Merry Electronics vs. Taiwan Cooperative Financial |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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