Correlation Between Methode Electronics and Kirin Holdings
Can any of the company-specific risk be diversified away by investing in both Methode Electronics and Kirin Holdings 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 Methode Electronics and Kirin Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and Kirin Holdings, you can compare the effects of market volatilities on Methode Electronics and Kirin Holdings 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 Methode Electronics with a short position of Kirin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and Kirin Holdings.
Diversification Opportunities for Methode Electronics and Kirin Holdings
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Methode and Kirin is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and Kirin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirin Holdings and Methode Electronics 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 Methode Electronics are associated (or correlated) with Kirin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirin Holdings has no effect on the direction of Methode Electronics i.e., Methode Electronics and Kirin Holdings go up and down completely randomly.
Pair Corralation between Methode Electronics and Kirin Holdings
Assuming the 90 days trading horizon Methode Electronics is expected to generate 3.28 times more return on investment than Kirin Holdings. However, Methode Electronics is 3.28 times more volatile than Kirin Holdings. It trades about 0.01 of its potential returns per unit of risk. Kirin Holdings is currently generating about -0.01 per unit of risk. If you would invest 1,102 in Methode Electronics on September 3, 2024 and sell it today you would lose (107.00) from holding Methode Electronics or give up 9.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Methode Electronics vs. Kirin Holdings
Performance |
| Timeline |
| Methode Electronics |
| Kirin Holdings |
Methode Electronics and Kirin Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Methode Electronics and Kirin Holdings
The main advantage of trading using opposite Methode Electronics and Kirin Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, Kirin Holdings 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 Kirin Holdings will offset losses from the drop in Kirin Holdings' long position.| Methode Electronics vs. Hon Hai Precision | Methode Electronics vs. Samsung SDI Co | Methode Electronics vs. Murata Manufacturing Co | Methode Electronics vs. Mitsubishi Electric |
| Kirin Holdings vs. Bumrungrad Hospital Public | Kirin Holdings vs. Perseus Mining Limited | Kirin Holdings vs. YOOMA WELLNESS INC | Kirin Holdings vs. HEALTHCARE REAL A |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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