Correlation Between Louisa Professional and Mega Financial
Can any of the company-specific risk be diversified away by investing in both Louisa Professional and Mega Financial 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 Louisa Professional and Mega Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Louisa Professional Coffee and Mega Financial Holding, you can compare the effects of market volatilities on Louisa Professional and Mega Financial 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 Louisa Professional with a short position of Mega Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Louisa Professional and Mega Financial.
Diversification Opportunities for Louisa Professional and Mega Financial
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Louisa and Mega is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Louisa Professional Coffee and Mega Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Financial Holding and Louisa Professional 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 Louisa Professional Coffee are associated (or correlated) with Mega Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Financial Holding has no effect on the direction of Louisa Professional i.e., Louisa Professional and Mega Financial go up and down completely randomly.
Pair Corralation between Louisa Professional and Mega Financial
Assuming the 90 days trading horizon Louisa Professional Coffee is expected to under-perform the Mega Financial. In addition to that, Louisa Professional is 1.51 times more volatile than Mega Financial Holding. It trades about -0.34 of its total potential returns per unit of risk. Mega Financial Holding is currently generating about 0.14 per unit of volatility. If you would invest 3,910 in Mega Financial Holding on August 30, 2024 and sell it today you would earn a total of 95.00 from holding Mega Financial Holding or generate 2.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Louisa Professional Coffee vs. Mega Financial Holding
Performance |
| Timeline |
| Louisa Professional |
| Mega Financial Holding |
Louisa Professional and Mega Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Louisa Professional and Mega Financial
The main advantage of trading using opposite Louisa Professional and Mega Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Louisa Professional position performs unexpectedly, Mega Financial 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 Mega Financial will offset losses from the drop in Mega Financial's long position.| Louisa Professional vs. Wowprime Corp | Louisa Professional vs. An Shin Food Services | Louisa Professional vs. New Palace International |
| Mega Financial vs. Taiwan Secom Co | Mega Financial vs. TTET Union Corp | Mega Financial vs. China Steel Chemical | Mega Financial vs. Taiwan Shin Kong |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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