Correlation Between Innolux Corp and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both Innolux Corp and Merry Electronics 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 Innolux Corp and Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Innolux Corp and Merry Electronics Co, you can compare the effects of market volatilities on Innolux Corp and Merry Electronics 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 Innolux Corp with a short position of Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innolux Corp and Merry Electronics.
Diversification Opportunities for Innolux Corp and Merry Electronics
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Innolux and Merry is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Innolux Corp and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics and Innolux Corp 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 Innolux Corp are associated (or correlated) with Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of Innolux Corp i.e., Innolux Corp and Merry Electronics go up and down completely randomly.
Pair Corralation between Innolux Corp and Merry Electronics
Assuming the 90 days trading horizon Innolux Corp is expected to under-perform the Merry Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Innolux Corp is 1.15 times less risky than Merry Electronics. The stock trades about -0.05 of its potential returns per unit of risk. The Merry Electronics Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,550 in Merry Electronics Co on September 12, 2024 and sell it today you would earn a total of 150.00 from holding Merry Electronics Co or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innolux Corp vs. Merry Electronics Co
Performance |
| Timeline |
| Innolux Corp |
| Merry Electronics |
Innolux Corp and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innolux Corp and Merry Electronics
The main advantage of trading using opposite Innolux Corp and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innolux Corp position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.| Innolux Corp vs. AU Optronics | Innolux Corp vs. Ruentex Development Co | Innolux Corp vs. WiseChip Semiconductor | Innolux Corp vs. Novatek Microelectronics Corp |
| Merry Electronics vs. AU Optronics | Merry Electronics vs. Innolux Corp | Merry Electronics vs. Ruentex Development Co | Merry Electronics vs. WiseChip Semiconductor |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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