Correlation Between Mechema Chemicals and Asia Electronic
Can any of the company-specific risk be diversified away by investing in both Mechema Chemicals and Asia Electronic 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 Mechema Chemicals and Asia Electronic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mechema Chemicals Int and Asia Electronic Material, you can compare the effects of market volatilities on Mechema Chemicals and Asia Electronic 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 Mechema Chemicals with a short position of Asia Electronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mechema Chemicals and Asia Electronic.
Diversification Opportunities for Mechema Chemicals and Asia Electronic
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mechema and Asia is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mechema Chemicals Int and Asia Electronic Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Electronic Material and Mechema Chemicals 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 Mechema Chemicals Int are associated (or correlated) with Asia Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Electronic Material has no effect on the direction of Mechema Chemicals i.e., Mechema Chemicals and Asia Electronic go up and down completely randomly.
Pair Corralation between Mechema Chemicals and Asia Electronic
Assuming the 90 days trading horizon Mechema Chemicals Int is expected to under-perform the Asia Electronic. In addition to that, Mechema Chemicals is 1.18 times more volatile than Asia Electronic Material. It trades about -0.47 of its total potential returns per unit of risk. Asia Electronic Material is currently generating about 0.02 per unit of volatility. If you would invest 2,010 in Asia Electronic Material on October 12, 2024 and sell it today you would earn a total of 5.00 from holding Asia Electronic Material or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mechema Chemicals Int vs. Asia Electronic Material
Performance |
| Timeline |
| Mechema Chemicals Int |
| Asia Electronic Material |
Mechema Chemicals and Asia Electronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mechema Chemicals and Asia Electronic
The main advantage of trading using opposite Mechema Chemicals and Asia Electronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mechema Chemicals position performs unexpectedly, Asia Electronic 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 Asia Electronic will offset losses from the drop in Asia Electronic's long position.| Mechema Chemicals vs. Coremax Corp | Mechema Chemicals vs. Taiwan Hopax Chemsistry | Mechema Chemicals vs. Delta Electronics | Mechema Chemicals vs. China Steel Chemical |
| Asia Electronic vs. Shinkong Synthetic Fiber | Asia Electronic vs. C Media Electronics | Asia Electronic vs. Taiwan Speciality Chemicals | Asia Electronic vs. Mechema Chemicals Int |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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