Correlation Between Mega Financial and Yeou Yih

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Can any of the company-specific risk be diversified away by investing in both Mega Financial and Yeou Yih 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 Yeou Yih 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 Yeou Yih Steel, you can compare the effects of market volatilities on Mega Financial and Yeou Yih 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 Yeou Yih. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and Yeou Yih.

Diversification Opportunities for Mega Financial and Yeou Yih

0.6
  Correlation Coefficient

Poor diversification

The 3 months correlation between Mega and Yeou is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and Yeou Yih Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeou Yih Steel 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 Yeou Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeou Yih Steel has no effect on the direction of Mega Financial i.e., Mega Financial and Yeou Yih go up and down completely randomly.

Pair Corralation between Mega Financial and Yeou Yih

Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.65 times more return on investment than Yeou Yih. However, Mega Financial Holding is 1.53 times less risky than Yeou Yih. It trades about -0.18 of its potential returns per unit of risk. Yeou Yih Steel is currently generating about -0.5 per unit of risk. If you would invest  3,945  in Mega Financial Holding on October 13, 2024 and sell it today you would lose (100.00) from holding Mega Financial Holding or give up 2.53% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Mega Financial Holding  vs.  Yeou Yih Steel

 Performance 
       Timeline  
Mega Financial Holding 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Mega Financial Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mega Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Yeou Yih Steel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Yeou Yih Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Mega Financial and Yeou Yih Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Mega Financial and Yeou Yih

The main advantage of trading using opposite Mega Financial and Yeou Yih positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial position performs unexpectedly, Yeou Yih 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 Yeou Yih will offset losses from the drop in Yeou Yih's long position.
The idea behind Mega Financial Holding and Yeou Yih Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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