Correlation Between Mega Financial and President Chain
Can any of the company-specific risk be diversified away by investing in both Mega Financial and President Chain 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 President Chain 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 President Chain Store, you can compare the effects of market volatilities on Mega Financial and President Chain 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 President Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and President Chain.
Diversification Opportunities for Mega Financial and President Chain
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mega and President is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and President Chain Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Chain Store 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 President Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Chain Store has no effect on the direction of Mega Financial i.e., Mega Financial and President Chain go up and down completely randomly.
Pair Corralation between Mega Financial and President Chain
Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.87 times more return on investment than President Chain. However, Mega Financial Holding is 1.15 times less risky than President Chain. It trades about 0.18 of its potential returns per unit of risk. President Chain Store is currently generating about -0.11 per unit of risk. If you would invest 3,865 in Mega Financial Holding on September 2, 2024 and sell it today you would earn a total of 110.00 from holding Mega Financial Holding or generate 2.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Financial Holding vs. President Chain Store
Performance |
| Timeline |
| Mega Financial Holding |
| President Chain Store |
Mega Financial and President Chain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Financial and President Chain
The main advantage of trading using opposite Mega Financial and President Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial position performs unexpectedly, President Chain 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 President Chain will offset losses from the drop in President Chain's 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 |
| President Chain vs. Uni President Enterprises Corp | President Chain vs. Formosa Plastics Corp | President Chain vs. Chunghwa Telecom Co | President Chain vs. Fubon 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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