Correlation Between INTER CARS and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both INTER CARS and Meiko 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 INTER CARS and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and Meiko Electronics Co, you can compare the effects of market volatilities on INTER CARS and Meiko 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 INTER CARS with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Meiko Electronics.
Diversification Opportunities for INTER CARS and Meiko Electronics
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between INTER and Meiko is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and INTER CARS 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 INTER CARS SA are associated (or correlated) with Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of INTER CARS i.e., INTER CARS and Meiko Electronics go up and down completely randomly.
Pair Corralation between INTER CARS and Meiko Electronics
Assuming the 90 days horizon INTER CARS is expected to generate 4.41 times less return on investment than Meiko Electronics. But when comparing it to its historical volatility, INTER CARS SA is 1.4 times less risky than Meiko Electronics. It trades about 0.03 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,040 in Meiko Electronics Co on September 3, 2024 and sell it today you would earn a total of 3,660 from holding Meiko Electronics Co or generate 179.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. Meiko Electronics Co
Performance |
| Timeline |
| INTER CARS SA |
| Meiko Electronics |
INTER CARS and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Meiko Electronics
The main advantage of trading using opposite INTER CARS and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS position performs unexpectedly, Meiko 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| INTER CARS vs. MOVIE GAMES SA | INTER CARS vs. FRACTAL GAMING GROUP | INTER CARS vs. Constellation Software | INTER CARS vs. Alfa Financial Software |
| Meiko Electronics vs. KCE EL PCL | Meiko Electronics vs. Benchmark Electronics | Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. NMI Holdings |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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