Correlation Between Meiko Electronics and Shimano
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and Shimano 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 Shimano 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 Shimano, you can compare the effects of market volatilities on Meiko Electronics and Shimano 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 Shimano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and Shimano.
Diversification Opportunities for Meiko Electronics and Shimano
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meiko and Shimano is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Shimano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shimano 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 Shimano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shimano has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Shimano go up and down completely randomly.
Pair Corralation between Meiko Electronics and Shimano
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 1.69 times more return on investment than Shimano. However, Meiko Electronics is 1.69 times more volatile than Shimano. It trades about 0.09 of its potential returns per unit of risk. Shimano is currently generating about -0.01 per unit of risk. If you would invest 1,740 in Meiko Electronics Co on September 13, 2024 and sell it today you would earn a total of 3,810 from holding Meiko Electronics Co or generate 218.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. Shimano
Performance |
| Timeline |
| Meiko Electronics |
| Shimano |
Meiko Electronics and Shimano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and Shimano
The main advantage of trading using opposite Meiko Electronics and Shimano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, Shimano 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 Shimano will offset losses from the drop in Shimano'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 |
| Shimano vs. Meiko Electronics Co | Shimano vs. AOI Electronics Co | Shimano vs. APPLIED MATERIALS | Shimano vs. Plastic Omnium |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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