Correlation Between Meiko Electronics and THORNEY TECHS

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

Diversification Opportunities for Meiko Electronics and THORNEY TECHS

0.11
  Correlation Coefficient

Average diversification

The 3 months correlation between Meiko and THORNEY is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and THORNEY TECHS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THORNEY TECHS LTD 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 THORNEY TECHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THORNEY TECHS LTD has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and THORNEY TECHS go up and down completely randomly.

Pair Corralation between Meiko Electronics and THORNEY TECHS

Assuming the 90 days horizon Meiko Electronics Co is expected to generate 0.67 times more return on investment than THORNEY TECHS. However, Meiko Electronics Co is 1.49 times less risky than THORNEY TECHS. It trades about 0.25 of its potential returns per unit of risk. THORNEY TECHS LTD is currently generating about -0.1 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 Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Meiko Electronics Co  vs.  THORNEY TECHS LTD

 Performance 
       Timeline  
Meiko Electronics 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Meiko Electronics Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Meiko Electronics reported solid returns over the last few months and may actually be approaching a breakup point.
THORNEY TECHS LTD 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in THORNEY TECHS LTD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, THORNEY TECHS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Meiko Electronics and THORNEY TECHS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Meiko Electronics and THORNEY TECHS

The main advantage of trading using opposite Meiko Electronics and THORNEY TECHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, THORNEY TECHS 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 THORNEY TECHS will offset losses from the drop in THORNEY TECHS's long position.
The idea behind Meiko Electronics Co and THORNEY TECHS LTD 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.
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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