Correlation Between Coretronic and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both Coretronic 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 Coretronic and Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coretronic and Merry Electronics Co, you can compare the effects of market volatilities on Coretronic 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 Coretronic with a short position of Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coretronic and Merry Electronics.
Diversification Opportunities for Coretronic and Merry Electronics
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Coretronic and Merry is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Coretronic and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics and Coretronic 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 Coretronic 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 Coretronic i.e., Coretronic and Merry Electronics go up and down completely randomly.
Pair Corralation between Coretronic and Merry Electronics
Assuming the 90 days trading horizon Coretronic is expected to generate 1.27 times more return on investment than Merry Electronics. However, Coretronic is 1.27 times more volatile than Merry Electronics Co. It trades about 0.04 of its potential returns per unit of risk. Merry Electronics Co is currently generating about 0.03 per unit of risk. If you would invest 5,319 in Coretronic on August 26, 2024 and sell it today you would earn a total of 1,601 from holding Coretronic or generate 30.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coretronic vs. Merry Electronics Co
Performance |
| Timeline |
| Coretronic |
| Merry Electronics |
Coretronic and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coretronic and Merry Electronics
The main advantage of trading using opposite Coretronic and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coretronic 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.| Coretronic vs. Merry Electronics Co | Coretronic vs. Sampo Corp | Coretronic vs. Taiwan Sanyo Electric | Coretronic vs. E Lead Electronic Co |
| Merry Electronics vs. Hunya Foods Co | Merry Electronics vs. Cathay Financial Holding | Merry Electronics vs. Asustek Computer | Merry Electronics vs. Taiwan Cooperative Financial |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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