Correlation Between Karmarts Public and Mega Lifesciences
Can any of the company-specific risk be diversified away by investing in both Karmarts Public 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 Karmarts Public and Mega Lifesciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karmarts Public and Mega Lifesciences Public, you can compare the effects of market volatilities on Karmarts Public 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 Karmarts Public with a short position of Mega Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karmarts Public and Mega Lifesciences.
Diversification Opportunities for Karmarts Public and Mega Lifesciences
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Karmarts and Mega is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Karmarts Public 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 Karmarts Public 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 Karmarts Public 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 Karmarts Public i.e., Karmarts Public and Mega Lifesciences go up and down completely randomly.
Pair Corralation between Karmarts Public and Mega Lifesciences
Assuming the 90 days trading horizon Karmarts Public is expected to generate 1.66 times more return on investment than Mega Lifesciences. However, Karmarts Public is 1.66 times more volatile than Mega Lifesciences Public. It trades about -0.06 of its potential returns per unit of risk. Mega Lifesciences Public is currently generating about -0.11 per unit of risk. If you would invest 1,300 in Karmarts Public on August 28, 2024 and sell it today you would lose (170.00) from holding Karmarts Public or give up 13.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Karmarts Public vs. Mega Lifesciences Public
Performance |
| Timeline |
| Karmarts Public |
| Mega Lifesciences Public |
Karmarts Public and Mega Lifesciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Karmarts Public and Mega Lifesciences
The main advantage of trading using opposite Karmarts Public and Mega Lifesciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karmarts Public 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.The idea behind Karmarts Public and Mega Lifesciences Public pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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