Correlation Between Meiko Electronics and Digilife Technologies
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and Digilife Technologies 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 Digilife Technologies 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 Digilife Technologies Limited, you can compare the effects of market volatilities on Meiko Electronics and Digilife Technologies 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 Digilife Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and Digilife Technologies.
Diversification Opportunities for Meiko Electronics and Digilife Technologies
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Meiko and Digilife is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Digilife Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digilife Technologies 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 Digilife Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digilife Technologies has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Digilife Technologies go up and down completely randomly.
Pair Corralation between Meiko Electronics and Digilife Technologies
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 0.5 times more return on investment than Digilife Technologies. However, Meiko Electronics Co is 1.99 times less risky than Digilife Technologies. It trades about 0.25 of its potential returns per unit of risk. Digilife Technologies Limited is currently generating about 0.02 per unit of risk. If you would invest 4,900 in Meiko Electronics Co on September 14, 2024 and sell it today you would earn a total of 600.00 from holding Meiko Electronics Co or generate 12.24% 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. Digilife Technologies Limited
Performance |
| Timeline |
| Meiko Electronics |
| Digilife Technologies |
Meiko Electronics and Digilife Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and Digilife Technologies
The main advantage of trading using opposite Meiko Electronics and Digilife Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, Digilife Technologies 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 Digilife Technologies will offset losses from the drop in Digilife Technologies' 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 |
| Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. SIVERS SEMICONDUCTORS AB | Digilife Technologies vs. Norsk Hydro ASA | Digilife Technologies vs. Reliance Steel Aluminum |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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