Correlation Between ARISTOCRAT LEISURE and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARISTOCRAT LEISURE and Meiko Electronics Co, you can compare the effects of market volatilities on ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARISTOCRAT LEISURE and Meiko Electronics.
Diversification Opportunities for ARISTOCRAT LEISURE and Meiko Electronics
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ARISTOCRAT and Meiko is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ARISTOCRAT LEISURE and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE 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 ARISTOCRAT LEISURE i.e., ARISTOCRAT LEISURE and Meiko Electronics go up and down completely randomly.
Pair Corralation between ARISTOCRAT LEISURE and Meiko Electronics
Assuming the 90 days trading horizon ARISTOCRAT LEISURE is expected to generate 0.65 times more return on investment than Meiko Electronics. However, ARISTOCRAT LEISURE is 1.53 times less risky than Meiko Electronics. It trades about 0.16 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about -0.04 per unit of risk. If you would invest 4,200 in ARISTOCRAT LEISURE on November 7, 2024 and sell it today you would earn a total of 220.00 from holding ARISTOCRAT LEISURE or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ARISTOCRAT LEISURE vs. Meiko Electronics Co
Performance |
| Timeline |
| ARISTOCRAT LEISURE |
| Meiko Electronics |
ARISTOCRAT LEISURE and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ARISTOCRAT LEISURE and Meiko Electronics
The main advantage of trading using opposite ARISTOCRAT LEISURE and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARISTOCRAT LEISURE 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.| ARISTOCRAT LEISURE vs. TT Electronics PLC | ARISTOCRAT LEISURE vs. Aegean Airlines SA | ARISTOCRAT LEISURE vs. Methode Electronics | ARISTOCRAT LEISURE vs. Samsung Electronics Co |
| Meiko Electronics vs. VIRGIN WINES UK | Meiko Electronics vs. NAKED WINES PLC | Meiko Electronics vs. Verizon Communications | Meiko Electronics vs. Chengdu PUTIAN Telecommunications |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |