Correlation Between Mega Lifesciences and MK Restaurant
Can any of the company-specific risk be diversified away by investing in both Mega Lifesciences and MK Restaurant 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 MK Restaurant 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 MK Restaurant Group, you can compare the effects of market volatilities on Mega Lifesciences and MK Restaurant 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 MK Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Lifesciences and MK Restaurant.
Diversification Opportunities for Mega Lifesciences and MK Restaurant
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mega and MK Restaurant is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Mega Lifesciences Public and MK Restaurant Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MK Restaurant Group 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 MK Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MK Restaurant Group has no effect on the direction of Mega Lifesciences i.e., Mega Lifesciences and MK Restaurant go up and down completely randomly.
Pair Corralation between Mega Lifesciences and MK Restaurant
Assuming the 90 days trading horizon Mega Lifesciences Public is expected to generate 0.96 times more return on investment than MK Restaurant. However, Mega Lifesciences Public is 1.04 times less risky than MK Restaurant. It trades about -0.03 of its potential returns per unit of risk. MK Restaurant Group is currently generating about -0.1 per unit of risk. If you would invest 4,155 in Mega Lifesciences Public on September 12, 2024 and sell it today you would lose (680.00) from holding Mega Lifesciences Public or give up 16.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Lifesciences Public vs. MK Restaurant Group
Performance |
| Timeline |
| Mega Lifesciences Public |
| MK Restaurant Group |
Mega Lifesciences and MK Restaurant Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Lifesciences and MK Restaurant
The main advantage of trading using opposite Mega Lifesciences and MK Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Lifesciences position performs unexpectedly, MK Restaurant 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 MK Restaurant will offset losses from the drop in MK Restaurant'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 |
| MK Restaurant vs. Hwa Fong Rubber | MK Restaurant vs. AAPICO Hitech Public | MK Restaurant vs. Haad Thip Public | MK Restaurant vs. Italian Thai Development 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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