Correlation Between Meiko Electronics and Seven West
Can any of the company-specific risk be diversified away by investing in both Meiko Electronics and Seven West 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 Seven West 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 Seven West Media, you can compare the effects of market volatilities on Meiko Electronics and Seven West 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 Seven West. Check out your portfolio center. Please also check ongoing floating volatility patterns of Meiko Electronics and Seven West.
Diversification Opportunities for Meiko Electronics and Seven West
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Meiko and Seven is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Seven West Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seven West Media 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 Seven West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seven West Media has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Seven West go up and down completely randomly.
Pair Corralation between Meiko Electronics and Seven West
Assuming the 90 days horizon Meiko Electronics is expected to generate 2.8 times less return on investment than Seven West. But when comparing it to its historical volatility, Meiko Electronics Co is 3.21 times less risky than Seven West. It trades about 0.02 of its potential returns per unit of risk. Seven West Media is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9.10 in Seven West Media on October 20, 2024 and sell it today you would lose (0.15) from holding Seven West Media or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Meiko Electronics Co vs. Seven West Media
Performance |
| Timeline |
| Meiko Electronics |
| Seven West Media |
Meiko Electronics and Seven West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Meiko Electronics and Seven West
The main advantage of trading using opposite Meiko Electronics and Seven West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Meiko Electronics position performs unexpectedly, Seven West 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 Seven West will offset losses from the drop in Seven West's long position.| Meiko Electronics vs. Singapore Telecommunications Limited | Meiko Electronics vs. Cairo Communication SpA | Meiko Electronics vs. COVIVIO HOTELS INH | Meiko Electronics vs. Choice Hotels International |
| Seven West vs. Insteel Industries | Seven West vs. Khiron Life Sciences | Seven West vs. COSMOSTEEL HLDGS | Seven West vs. Olympic Steel |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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