Correlation Between Mega Lifesciences and East Coast
Can any of the company-specific risk be diversified away by investing in both Mega Lifesciences and East Coast 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 Mega Lifesciences and East Coast into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mega Lifesciences Public and East Coast Furnitech, you can compare the effects of market volatilities on Mega Lifesciences and East Coast 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 Mega Lifesciences with a short position of East Coast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Lifesciences and East Coast.
Diversification Opportunities for Mega Lifesciences and East Coast
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mega and East is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Mega Lifesciences Public and East Coast Furnitech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Coast Furnitech and Mega Lifesciences 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 Mega Lifesciences Public are associated (or correlated) with East Coast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Coast Furnitech has no effect on the direction of Mega Lifesciences i.e., Mega Lifesciences and East Coast go up and down completely randomly.
Pair Corralation between Mega Lifesciences and East Coast
Assuming the 90 days trading horizon Mega Lifesciences Public is expected to under-perform the East Coast. But the stock apears to be less risky and, when comparing its historical volatility, Mega Lifesciences Public is 29.69 times less risky than East Coast. The stock trades about -0.04 of its potential returns per unit of risk. The East Coast Furnitech is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 178.00 in East Coast Furnitech on August 28, 2024 and sell it today you would lose (136.00) from holding East Coast Furnitech or give up 76.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Lifesciences Public vs. East Coast Furnitech
Performance |
| Timeline |
| Mega Lifesciences Public |
| East Coast Furnitech |
Mega Lifesciences and East Coast Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Lifesciences and East Coast
The main advantage of trading using opposite Mega Lifesciences and East Coast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Lifesciences position performs unexpectedly, East Coast 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 East Coast will offset losses from the drop in East Coast's long position.| Mega Lifesciences vs. Home Product Center | Mega Lifesciences vs. Minor International Public | Mega Lifesciences vs. Com7 PCL | Mega Lifesciences vs. Bangkok Dusit Medical |
| East Coast vs. G Capital Public | East Coast vs. E for L | East Coast vs. Filter Vision Public | East Coast vs. Chewathai Public |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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