Correlation Between Transport International and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both Transport International 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 Transport International and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport International Holdings and Meiko Electronics Co, you can compare the effects of market volatilities on Transport International 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 Transport International with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport International and Meiko Electronics.
Diversification Opportunities for Transport International and Meiko Electronics
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Transport and Meiko is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Transport International Holdin and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and Transport International 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 Transport International Holdings 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 Transport International i.e., Transport International and Meiko Electronics go up and down completely randomly.
Pair Corralation between Transport International and Meiko Electronics
Assuming the 90 days horizon Transport International Holdings is expected to generate 1.33 times more return on investment than Meiko Electronics. However, Transport International is 1.33 times more volatile than Meiko Electronics Co. It trades about 0.01 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 95.00 in Transport International Holdings on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Transport International Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Transport International Holdin vs. Meiko Electronics Co
Performance |
| Timeline |
| Transport International |
| Meiko Electronics |
Transport International and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transport International and Meiko Electronics
The main advantage of trading using opposite Transport International and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport International 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.| Transport International vs. CSX Corporation | Transport International vs. Norfolk Southern | Transport International vs. MTR Limited | Transport International vs. CRRC Limited |
| Meiko Electronics vs. Mitsubishi Materials | Meiko Electronics vs. Cogent Communications Holdings | Meiko Electronics vs. Hyster Yale Materials Handling | Meiko Electronics vs. Materialise NV |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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