Correlation Between Asia Vital and Merida Industry
Can any of the company-specific risk be diversified away by investing in both Asia Vital and Merida Industry 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 Asia Vital and Merida Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Vital Components and Merida Industry Co, you can compare the effects of market volatilities on Asia Vital and Merida Industry 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 Asia Vital with a short position of Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Vital and Merida Industry.
Diversification Opportunities for Asia Vital and Merida Industry
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Asia and Merida is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Asia Vital Components and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry and Asia Vital 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 Asia Vital Components are associated (or correlated) with Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Asia Vital i.e., Asia Vital and Merida Industry go up and down completely randomly.
Pair Corralation between Asia Vital and Merida Industry
Assuming the 90 days trading horizon Asia Vital Components is expected to generate 1.6 times more return on investment than Merida Industry. However, Asia Vital is 1.6 times more volatile than Merida Industry Co. It trades about 0.08 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.02 per unit of risk. If you would invest 32,850 in Asia Vital Components on August 29, 2024 and sell it today you would earn a total of 30,150 from holding Asia Vital Components or generate 91.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Vital Components vs. Merida Industry Co
Performance |
| Timeline |
| Asia Vital Components |
| Merida Industry |
Asia Vital and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Vital and Merida Industry
The main advantage of trading using opposite Asia Vital and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Vital position performs unexpectedly, Merida Industry 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 Merida Industry will offset losses from the drop in Merida Industry's long position.| Asia Vital vs. Sitronix Technology Corp | Asia Vital vs. Elan Microelectronics Corp | Asia Vital vs. Holtek Semiconductor |
| Merida Industry vs. Yulon Finance Corp | Merida Industry vs. Taiwan Secom Co | Merida Industry vs. Great Wall Enterprise |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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