Correlation Between Meiko Electronics and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and AUTO TRADER 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 Meiko Electronics and AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Meiko Electronics Co and AUTO TRADER ADR, you can compare the effects of market volatilities on Meiko Electronics and AUTO TRADER 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 Meiko Electronics with a short position of AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and AUTO TRADER.
Diversification Opportunities for Meiko Electronics and AUTO TRADER
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meiko and AUTO is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR and Meiko 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 Meiko Electronics Co are associated (or correlated) with AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and AUTO TRADER go up and down completely randomly.
Pair Corralation between Meiko Electronics and AUTO TRADER
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 2.66 times more return on investment than AUTO TRADER. However, Meiko Electronics is 2.66 times more volatile than AUTO TRADER ADR. It trades about 0.32 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about -0.13 per unit of risk. If you would invest 3,720 in Meiko Electronics Co on August 25, 2024 and sell it today you would earn a total of 1,530 from holding Meiko Electronics Co or generate 41.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. AUTO TRADER ADR
Performance |
| Timeline |
| Meiko Electronics |
| AUTO TRADER ADR |
Meiko Electronics and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and AUTO TRADER
The main advantage of trading using opposite Meiko Electronics and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| Meiko Electronics vs. EMBARK EDUCATION LTD | Meiko Electronics vs. Laureate Education | Meiko Electronics vs. PennyMac Mortgage Investment | Meiko Electronics vs. STRAYER EDUCATION |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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