Correlation Between Mega Financial and MPI
Can any of the company-specific risk be diversified away by investing in both Mega Financial and MPI 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 MPI 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 MPI Corporation, you can compare the effects of market volatilities on Mega Financial and MPI 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 MPI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and MPI.
Diversification Opportunities for Mega Financial and MPI
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mega and MPI is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and MPI Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MPI Corporation 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 MPI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MPI Corporation has no effect on the direction of Mega Financial i.e., Mega Financial and MPI go up and down completely randomly.
Pair Corralation between Mega Financial and MPI
Assuming the 90 days trading horizon Mega Financial is expected to generate 27.84 times less return on investment than MPI. But when comparing it to its historical volatility, Mega Financial Holding is 5.58 times less risky than MPI. It trades about 0.01 of its potential returns per unit of risk. MPI Corporation is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 87,800 in MPI Corporation on October 23, 2024 and sell it today you would earn a total of 3,100 from holding MPI Corporation or generate 3.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Financial Holding vs. MPI Corp.
Performance |
| Timeline |
| Mega Financial Holding |
| MPI Corporation |
Mega Financial and MPI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Financial and MPI
The main advantage of trading using opposite Mega Financial and MPI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial position performs unexpectedly, MPI 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 MPI will offset losses from the drop in MPI'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 |
| MPI vs. Novatek Microelectronics Corp | MPI vs. King Yuan Electronics | MPI vs. Wafer Works | MPI vs. Chipbond Technology |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |