Correlation Between Mega Financial and Everlight Electronics
Can any of the company-specific risk be diversified away by investing in both Mega Financial and Everlight 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 Mega Financial and Everlight Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mega Financial Holding and Everlight Electronics Co, you can compare the effects of market volatilities on Mega Financial and Everlight 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 Mega Financial with a short position of Everlight Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and Everlight Electronics.
Diversification Opportunities for Mega Financial and Everlight Electronics
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mega and Everlight is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and Everlight Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everlight Electronics and Mega Financial 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 Mega Financial Holding are associated (or correlated) with Everlight Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everlight Electronics has no effect on the direction of Mega Financial i.e., Mega Financial and Everlight Electronics go up and down completely randomly.
Pair Corralation between Mega Financial and Everlight Electronics
Assuming the 90 days trading horizon Mega Financial is expected to generate 5.01 times less return on investment than Everlight Electronics. But when comparing it to its historical volatility, Mega Financial Holding is 1.65 times less risky than Everlight Electronics. It trades about 0.03 of its potential returns per unit of risk. Everlight Electronics Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,618 in Everlight Electronics Co on September 2, 2024 and sell it today you would earn a total of 3,152 from holding Everlight Electronics Co or generate 68.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.73% |
| Values | Daily Returns |
Mega Financial Holding vs. Everlight Electronics Co
Performance |
| Timeline |
| Mega Financial Holding |
| Everlight Electronics |
Mega Financial and Everlight Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Financial and Everlight Electronics
The main advantage of trading using opposite Mega Financial and Everlight Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial position performs unexpectedly, Everlight 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 Everlight Electronics will offset losses from the drop in Everlight Electronics' long position.| Mega Financial vs. CTBC Financial Holding | Mega Financial vs. Fubon Financial Holding | Mega Financial vs. First Financial Holding | Mega Financial vs. Cathay Financial Holding |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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