Correlation Between Mega Lifesciences and Premier Technology
Can any of the company-specific risk be diversified away by investing in both Mega Lifesciences and Premier Technology 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 Premier Technology 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 Premier Technology Public, you can compare the effects of market volatilities on Mega Lifesciences and Premier Technology 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 Premier Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Lifesciences and Premier Technology.
Diversification Opportunities for Mega Lifesciences and Premier Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Mega and Premier is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Mega Lifesciences Public and Premier Technology Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Technology Public 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 Premier Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Technology Public has no effect on the direction of Mega Lifesciences i.e., Mega Lifesciences and Premier Technology go up and down completely randomly.
Pair Corralation between Mega Lifesciences and Premier Technology
Assuming the 90 days trading horizon Mega Lifesciences Public is expected to under-perform the Premier Technology. But the stock apears to be less risky and, when comparing its historical volatility, Mega Lifesciences Public is 56.53 times less risky than Premier Technology. The stock trades about -0.06 of its potential returns per unit of risk. The Premier Technology Public is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 846.00 in Premier Technology Public on August 28, 2024 and sell it today you would earn a total of 124.00 from holding Premier Technology Public or generate 14.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mega Lifesciences Public vs. Premier Technology Public
Performance |
| Timeline |
| Mega Lifesciences Public |
| Premier Technology Public |
Mega Lifesciences and Premier Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mega Lifesciences and Premier Technology
The main advantage of trading using opposite Mega Lifesciences and Premier Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Lifesciences position performs unexpectedly, Premier Technology 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 Premier Technology will offset losses from the drop in Premier Technology'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 |
| Premier Technology vs. AP Public | Premier Technology vs. Jasmine International Public | Premier Technology vs. Asia Plus Group | Premier Technology vs. Bangkok Aviation Fuel |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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