Correlation Between Merida Industry and Advanced International
Can any of the company-specific risk be diversified away by investing in both Merida Industry and Advanced International 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 Merida Industry and Advanced International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merida Industry Co and Advanced International Multitech, you can compare the effects of market volatilities on Merida Industry and Advanced International 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 Merida Industry with a short position of Advanced International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merida Industry and Advanced International.
Diversification Opportunities for Merida Industry and Advanced International
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merida and Advanced is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Advanced International Multite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced International and Merida Industry 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 Merida Industry Co are associated (or correlated) with Advanced International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced International has no effect on the direction of Merida Industry i.e., Merida Industry and Advanced International go up and down completely randomly.
Pair Corralation between Merida Industry and Advanced International
Assuming the 90 days trading horizon Merida Industry Co is expected to generate 1.52 times more return on investment than Advanced International. However, Merida Industry is 1.52 times more volatile than Advanced International Multitech. It trades about -0.01 of its potential returns per unit of risk. Advanced International Multitech is currently generating about -0.02 per unit of risk. If you would invest 18,474 in Merida Industry Co on August 25, 2024 and sell it today you would lose (2,924) from holding Merida Industry Co or give up 15.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Merida Industry Co vs. Advanced International Multite
Performance |
| Timeline |
| Merida Industry |
| Advanced International |
Merida Industry and Advanced International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merida Industry and Advanced International
The main advantage of trading using opposite Merida Industry and Advanced International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merida Industry position performs unexpectedly, Advanced International 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 Advanced International will offset losses from the drop in Advanced International's long position.| Merida Industry vs. Taiwan Semiconductor Manufacturing | Merida Industry vs. Hon Hai Precision | Merida Industry vs. MediaTek | Merida Industry vs. Chunghwa Telecom Co |
| Advanced International vs. Giant Manufacturing Co | Advanced International vs. Johnson Health Tech | Advanced International vs. Sports Gear Co | Advanced International vs. Power Wind Health |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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