Correlation Between First Abacus and Megawide Construction
Can any of the company-specific risk be diversified away by investing in both First Abacus and Megawide Construction 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 First Abacus and Megawide Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Abacus Financial and Megawide Construction Corp, you can compare the effects of market volatilities on First Abacus and Megawide Construction 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 First Abacus with a short position of Megawide Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Abacus and Megawide Construction.
Diversification Opportunities for First Abacus and Megawide Construction
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between First and Megawide is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding First Abacus Financial and Megawide Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megawide Construction and First Abacus 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 First Abacus Financial are associated (or correlated) with Megawide Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megawide Construction has no effect on the direction of First Abacus i.e., First Abacus and Megawide Construction go up and down completely randomly.
Pair Corralation between First Abacus and Megawide Construction
Assuming the 90 days trading horizon First Abacus Financial is expected to under-perform the Megawide Construction. In addition to that, First Abacus is 1.58 times more volatile than Megawide Construction Corp. It trades about -0.16 of its total potential returns per unit of risk. Megawide Construction Corp is currently generating about 0.05 per unit of volatility. If you would invest 9,740 in Megawide Construction Corp on October 20, 2024 and sell it today you would earn a total of 55.00 from holding Megawide Construction Corp or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Abacus Financial vs. Megawide Construction Corp
Performance |
| Timeline |
| First Abacus Financial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Megawide Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
First Abacus and Megawide Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Abacus and Megawide Construction
The main advantage of trading using opposite First Abacus and Megawide Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Abacus position performs unexpectedly, Megawide Construction 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 Megawide Construction will offset losses from the drop in Megawide Construction's long position.| First Abacus vs. Apex Mining Co | First Abacus vs. Philex Mining Corp | First Abacus vs. Converge Information Communications | First Abacus vs. House of Investments |
| Megawide Construction vs. Atlas Consolidated Mining | Megawide Construction vs. Jollibee Foods Corp | Megawide Construction vs. Manila Mining Corp | Megawide Construction vs. Lepanto Consolidated Mining |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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