Correlation Between Meiko Electronics and United Utilities
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on Meiko Electronics and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and United Utilities.
Diversification Opportunities for Meiko Electronics and United Utilities
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Meiko and United is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and United Utilities go up and down completely randomly.
Pair Corralation between Meiko Electronics and United Utilities
Assuming the 90 days horizon Meiko Electronics Co is expected to generate 3.49 times more return on investment than United Utilities. However, Meiko Electronics is 3.49 times more volatile than United Utilities Group. It trades about 0.38 of its potential returns per unit of risk. United Utilities Group is currently generating about 0.33 per unit of risk. If you would invest 3,660 in Meiko Electronics Co on September 1, 2024 and sell it today you would earn a total of 1,890 from holding Meiko Electronics Co or generate 51.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. United Utilities Group
Performance |
| Timeline |
| Meiko Electronics |
| United Utilities |
Meiko Electronics and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and United Utilities
The main advantage of trading using opposite Meiko Electronics and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Meiko Electronics vs. Astral Foods Limited | Meiko Electronics vs. Choice Hotels International | Meiko Electronics vs. MELIA HOTELS | Meiko Electronics vs. HYATT HOTELS A |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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