Correlation Between Home Product and Mega Lifesciences
Can any of the company-specific risk be diversified away by investing in both Home Product and Mega Lifesciences 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 Home Product and Mega Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Home Product Center and Mega Lifesciences Public, you can compare the effects of market volatilities on Home Product and Mega Lifesciences 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 Home Product with a short position of Mega Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Home Product and Mega Lifesciences.
Diversification Opportunities for Home Product and Mega Lifesciences
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Home and Mega is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Home Product Center and Mega Lifesciences Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Lifesciences Public and Home Product 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 Home Product Center are associated (or correlated) with Mega Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Lifesciences Public has no effect on the direction of Home Product i.e., Home Product and Mega Lifesciences go up and down completely randomly.
Pair Corralation between Home Product and Mega Lifesciences
Assuming the 90 days trading horizon Home Product Center is expected to under-perform the Mega Lifesciences. In addition to that, Home Product is 1.05 times more volatile than Mega Lifesciences Public. It trades about -0.05 of its total potential returns per unit of risk. Mega Lifesciences Public is currently generating about -0.05 per unit of volatility. If you would invest 4,763 in Mega Lifesciences Public on November 5, 2024 and sell it today you would lose (1,613) from holding Mega Lifesciences Public or give up 33.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Home Product Center vs. Mega Lifesciences Public
Performance |
| Timeline |
| Home Product Center |
| Mega Lifesciences Public |
Home Product and Mega Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Home Product and Mega Lifesciences
The main advantage of trading using opposite Home Product and Mega Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Home Product position performs unexpectedly, Mega Lifesciences 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 Mega Lifesciences will offset losses from the drop in Mega Lifesciences' long position.| Home Product vs. CP ALL Public | Home Product vs. Bangkok Dusit Medical | Home Product vs. Central Pattana Public | Home Product vs. Advanced Info Service |
| Mega Lifesciences vs. Home Product Center | Mega Lifesciences vs. Minor International Public | Mega Lifesciences vs. Com7 PCL | Mega Lifesciences vs. Bangkok Dusit Medical |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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