Correlation Between General Interface and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both General Interface 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 General Interface and Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Interface Solution and Merry Electronics Co, you can compare the effects of market volatilities on General Interface 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 General Interface with a short position of Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Interface and Merry Electronics.
Diversification Opportunities for General Interface and Merry Electronics
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between General and Merry is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding General Interface Solution and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics and General Interface 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 General Interface Solution 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 General Interface i.e., General Interface and Merry Electronics go up and down completely randomly.
Pair Corralation between General Interface and Merry Electronics
Assuming the 90 days trading horizon General Interface Solution is expected to under-perform the Merry Electronics. But the stock apears to be less risky and, when comparing its historical volatility, General Interface Solution is 1.09 times less risky than Merry Electronics. The stock trades about -0.43 of its potential returns per unit of risk. The Merry Electronics Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 10,650 in Merry Electronics Co on September 2, 2024 and sell it today you would lose (50.00) from holding Merry Electronics Co or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Interface Solution vs. Merry Electronics Co
Performance |
| Timeline |
| General Interface |
| Merry Electronics |
General Interface and Merry Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with General Interface and Merry Electronics
The main advantage of trading using opposite General Interface and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Interface 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.The idea behind General Interface Solution and Merry Electronics Co 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.| Merry Electronics vs. Asia Metal Industries | Merry Electronics vs. Chunghwa Telecom Co | Merry Electronics vs. Oceanic Beverages Co | Merry Electronics vs. Chief Telecom |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |