Correlation Between Meiko Electronics and CENTURIA OFFICE

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Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and CENTURIA OFFICE 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 CENTURIA OFFICE 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 CENTURIA OFFICE REIT, you can compare the effects of market volatilities on Meiko Electronics and CENTURIA OFFICE 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 CENTURIA OFFICE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and CENTURIA OFFICE.

Diversification Opportunities for Meiko Electronics and CENTURIA OFFICE

-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Meiko and CENTURIA is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and CENTURIA OFFICE REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CENTURIA OFFICE REIT 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 CENTURIA OFFICE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CENTURIA OFFICE REIT has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and CENTURIA OFFICE go up and down completely randomly.

Pair Corralation between Meiko Electronics and CENTURIA OFFICE

Assuming the 90 days horizon Meiko Electronics Co is expected to generate 1.87 times more return on investment than CENTURIA OFFICE. However, Meiko Electronics is 1.87 times more volatile than CENTURIA OFFICE REIT. It trades about 0.09 of its potential returns per unit of risk. CENTURIA OFFICE REIT is currently generating about -0.01 per unit of risk. If you would invest  1,700  in Meiko Electronics Co on September 23, 2024 and sell it today you would earn a total of  3,850  from holding Meiko Electronics Co or generate 226.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Meiko Electronics Co  vs.  CENTURIA OFFICE REIT

 Performance 
       Timeline  
Meiko Electronics 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Meiko Electronics Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Meiko Electronics reported solid returns over the last few months and may actually be approaching a breakup point.
CENTURIA OFFICE REIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Meiko Electronics and CENTURIA OFFICE Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Meiko Electronics and CENTURIA OFFICE

The main advantage of trading using opposite Meiko Electronics and CENTURIA OFFICE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, CENTURIA OFFICE 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 CENTURIA OFFICE will offset losses from the drop in CENTURIA OFFICE's long position.
The idea behind Meiko Electronics Co and CENTURIA OFFICE REIT 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.
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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