Correlation Between Meiko Electronics and Industrial
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and Industrial 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 Industrial 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 Industrial and Commercial, you can compare the effects of market volatilities on Meiko Electronics and Industrial 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 Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and Industrial.
Diversification Opportunities for Meiko Electronics and Industrial
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Meiko and Industrial is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial 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 Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Industrial go up and down completely randomly.
Pair Corralation between Meiko Electronics and Industrial
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 1.36 times more return on investment than Industrial. However, Meiko Electronics is 1.36 times more volatile than Industrial and Commercial. It trades about 0.1 of its potential returns per unit of risk. Industrial and Commercial is currently generating about 0.05 per unit of risk. If you would invest 2,540 in Meiko Electronics Co on September 15, 2024 and sell it today you would earn a total of 3,110 from holding Meiko Electronics Co or generate 122.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. Industrial and Commercial
Performance |
| Timeline |
| Meiko Electronics |
| Industrial and Commercial |
Meiko Electronics and Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and Industrial
The main advantage of trading using opposite Meiko Electronics and Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, Industrial 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 Industrial will offset losses from the drop in Industrial's long position.| Meiko Electronics vs. Benchmark Electronics | Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. SIVERS SEMICONDUCTORS AB | Meiko Electronics vs. Norsk Hydro ASA |
| Industrial vs. STMicroelectronics NV | Industrial vs. Meiko Electronics Co | Industrial vs. Richardson Electronics | Industrial vs. ELECTRONIC ARTS |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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