Correlation Between MEGA METAL and Elite Naturel
Can any of the company-specific risk be diversified away by investing in both MEGA METAL and Elite Naturel 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 METAL and Elite Naturel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MEGA METAL and Elite Naturel Organik, you can compare the effects of market volatilities on MEGA METAL and Elite Naturel 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 METAL with a short position of Elite Naturel. Check out your portfolio center. Please also check ongoing floating volatility patterns of MEGA METAL and Elite Naturel.
Diversification Opportunities for MEGA METAL and Elite Naturel
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MEGA and Elite is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding MEGA METAL and Elite Naturel Organik in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elite Naturel Organik and MEGA METAL 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 METAL are associated (or correlated) with Elite Naturel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elite Naturel Organik has no effect on the direction of MEGA METAL i.e., MEGA METAL and Elite Naturel go up and down completely randomly.
Pair Corralation between MEGA METAL and Elite Naturel
Assuming the 90 days trading horizon MEGA METAL is expected to under-perform the Elite Naturel. But the stock apears to be less risky and, when comparing its historical volatility, MEGA METAL is 2.01 times less risky than Elite Naturel. The stock trades about -0.05 of its potential returns per unit of risk. The Elite Naturel Organik is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 2,744 in Elite Naturel Organik on September 12, 2024 and sell it today you would earn a total of 1,678 from holding Elite Naturel Organik or generate 61.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MEGA METAL vs. Elite Naturel Organik
Performance |
| Timeline |
| MEGA METAL |
| Elite Naturel Organik |
MEGA METAL and Elite Naturel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MEGA METAL and Elite Naturel
The main advantage of trading using opposite MEGA METAL and Elite Naturel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MEGA METAL position performs unexpectedly, Elite Naturel 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 Elite Naturel will offset losses from the drop in Elite Naturel's long position.| MEGA METAL vs. SASA Polyester Sanayi | MEGA METAL vs. Turkish Airlines | MEGA METAL vs. Koc Holding AS | MEGA METAL vs. Ford Otomotiv Sanayi |
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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