Correlation Between Mega Lifesciences and North East
Can any of the company-specific risk be diversified away by investing in both Mega Lifesciences and North East 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 North East 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 North East Rubbers, you can compare the effects of market volatilities on Mega Lifesciences and North East 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 North East. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Lifesciences and North East.
Diversification Opportunities for Mega Lifesciences and North East
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mega and North is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mega Lifesciences Public and North East Rubbers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on North East Rubbers 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 North East. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of North East Rubbers has no effect on the direction of Mega Lifesciences i.e., Mega Lifesciences and North East go up and down completely randomly.
Pair Corralation between Mega Lifesciences and North East
Assuming the 90 days trading horizon Mega Lifesciences Public is expected to under-perform the North East. But the stock apears to be less risky and, when comparing its historical volatility, Mega Lifesciences Public is 1.04 times less risky than North East. The stock trades about -0.01 of its potential returns per unit of risk. The North East Rubbers is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 433.00 in North East Rubbers on September 1, 2024 and sell it today you would earn a total of 51.00 from holding North East Rubbers or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Lifesciences Public vs. North East Rubbers
Performance |
| Timeline |
| Mega Lifesciences Public |
| North East Rubbers |
Mega Lifesciences and North East Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Lifesciences and North East
The main advantage of trading using opposite Mega Lifesciences and North East positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Lifesciences position performs unexpectedly, North East 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 North East will offset losses from the drop in North East'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 |
| North East vs. Sri Trang Agro Industry | North East vs. Jay Mart Public | North East vs. Com7 PCL | North East vs. Energy Absolute 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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