Correlation Between Andes Technology and Merida Industry
Can any of the company-specific risk be diversified away by investing in both Andes Technology 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 Andes Technology and Merida Industry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Andes Technology Corp and Merida Industry Co, you can compare the effects of market volatilities on Andes Technology 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 Andes Technology with a short position of Merida Industry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Andes Technology and Merida Industry.
Diversification Opportunities for Andes Technology and Merida Industry
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Andes and Merida is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Andes Technology Corp and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry and Andes Technology 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 Andes Technology Corp 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 Andes Technology i.e., Andes Technology and Merida Industry go up and down completely randomly.
Pair Corralation between Andes Technology and Merida Industry
Assuming the 90 days trading horizon Andes Technology Corp is expected to generate 0.97 times more return on investment than Merida Industry. However, Andes Technology Corp is 1.03 times less risky than Merida Industry. It trades about -0.15 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.19 per unit of risk. If you would invest 39,700 in Andes Technology Corp on September 1, 2024 and sell it today you would lose (3,100) from holding Andes Technology Corp or give up 7.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Andes Technology Corp vs. Merida Industry Co
Performance |
| Timeline |
| Andes Technology Corp |
| Merida Industry |
Andes Technology and Merida Industry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Andes Technology and Merida Industry
The main advantage of trading using opposite Andes Technology and Merida Industry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Andes Technology 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.| Andes Technology vs. Cameo Communications | Andes Technology vs. Arima Communications Corp | Andes Technology vs. Cheng Mei Materials | Andes Technology vs. Nankang Rubber Tire |
| Merida Industry vs. Chaintech Technology Corp | Merida Industry vs. AVerMedia Technologies | Merida Industry vs. Avision | Merida Industry vs. Clevo Co |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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