Correlation Between Charter Communications and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications and Meiko Electronics Co, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Meiko Electronics.
Diversification Opportunities for Charter Communications and Meiko Electronics
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and Meiko is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and Charter Communications 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 Charter Communications 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 Charter Communications i.e., Charter Communications and Meiko Electronics go up and down completely randomly.
Pair Corralation between Charter Communications and Meiko Electronics
Assuming the 90 days trading horizon Charter Communications is expected to generate 5.16 times less return on investment than Meiko Electronics. But when comparing it to its historical volatility, Charter Communications is 1.41 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 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,590 in Meiko Electronics Co on August 31, 2024 and sell it today you would earn a total of 3,960 from holding Meiko Electronics Co or generate 249.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.74% |
| Values | Daily Returns |
Charter Communications vs. Meiko Electronics Co
Performance |
| Timeline |
| Charter Communications |
| Meiko Electronics |
Charter Communications and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Meiko Electronics
The main advantage of trading using opposite Charter Communications and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc | Charter Communications vs. Apple Inc |
| Meiko Electronics vs. Plexus Corp | Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. NMI Holdings | Meiko Electronics vs. Origin Agritech |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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