Correlation Between Mega Financial and Louisa Professional
Can any of the company-specific risk be diversified away by investing in both Mega Financial and Louisa Professional 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 Louisa Professional 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 Louisa Professional Coffee, you can compare the effects of market volatilities on Mega Financial and Louisa Professional 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 Louisa Professional. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and Louisa Professional.
Diversification Opportunities for Mega Financial and Louisa Professional
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mega and Louisa is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and Louisa Professional Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Louisa Professional 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 Louisa Professional. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Louisa Professional has no effect on the direction of Mega Financial i.e., Mega Financial and Louisa Professional go up and down completely randomly.
Pair Corralation between Mega Financial and Louisa Professional
Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.66 times more return on investment than Louisa Professional. However, Mega Financial Holding is 1.51 times less risky than Louisa Professional. It trades about 0.14 of its potential returns per unit of risk. Louisa Professional Coffee is currently generating about -0.34 per unit of risk. 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 |
Mega Financial Holding vs. Louisa Professional Coffee
Performance |
| Timeline |
| Mega Financial Holding |
| Louisa Professional |
Mega Financial and Louisa Professional Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Financial and Louisa Professional
The main advantage of trading using opposite Mega Financial and Louisa Professional positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial position performs unexpectedly, Louisa Professional 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 Louisa Professional will offset losses from the drop in Louisa Professional's long position.| Mega Financial vs. Taiwan Secom Co | Mega Financial vs. TTET Union Corp | Mega Financial vs. China Steel Chemical | Mega Financial vs. Taiwan Shin Kong |
| Louisa Professional vs. Wowprime Corp | Louisa Professional vs. An Shin Food Services | Louisa Professional vs. New Palace International |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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