Correlation Between Methode Electronics and MicroCloud Hologram

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Can any of the company-specific risk be diversified away by investing in both Methode Electronics and MicroCloud Hologram 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 Methode Electronics and MicroCloud Hologram into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Methode Electronics and MicroCloud Hologram, you can compare the effects of market volatilities on Methode Electronics and MicroCloud Hologram 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 Methode Electronics with a short position of MicroCloud Hologram. Check out your portfolio center. Please also check ongoing floating volatility patterns of Methode Electronics and MicroCloud Hologram.

Diversification Opportunities for Methode Electronics and MicroCloud Hologram

MethodeMicroCloudDiversified AwayMethodeMicroCloudDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Methode and MicroCloud is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Methode Electronics and MicroCloud Hologram in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MicroCloud Hologram and Methode Electronics 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 Methode Electronics are associated (or correlated) with MicroCloud Hologram. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MicroCloud Hologram has no effect on the direction of Methode Electronics i.e., Methode Electronics and MicroCloud Hologram go up and down completely randomly.

Pair Corralation between Methode Electronics and MicroCloud Hologram

Considering the 90-day investment horizon Methode Electronics is expected to under-perform the MicroCloud Hologram. But the stock apears to be less risky and, when comparing its historical volatility, Methode Electronics is 11.74 times less risky than MicroCloud Hologram. The stock trades about -0.05 of its potential returns per unit of risk. The MicroCloud Hologram is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  48,400  in MicroCloud Hologram on November 27, 2024 and sell it today you would lose (48,243) from holding MicroCloud Hologram or give up 99.68% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Methode Electronics  vs.  MicroCloud Hologram

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50050100150
JavaScript chart by amCharts 3.21.15MEI HOLO
       Timeline  
Methode Electronics 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Over the last 90 days Methode Electronics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical and fundamental indicators, Methode Electronics is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb1011121314151617
MicroCloud Hologram 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in MicroCloud Hologram are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, MicroCloud Hologram displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb23456789

Methode Electronics and MicroCloud Hologram Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-13.57-10.17-6.76-3.350.03.466.9910.5114.03 0.0050.0100.0150.020
JavaScript chart by amCharts 3.21.15MEI HOLO
       Returns  

Pair Trading with Methode Electronics and MicroCloud Hologram

The main advantage of trading using opposite Methode Electronics and MicroCloud Hologram positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Methode Electronics position performs unexpectedly, MicroCloud Hologram 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 MicroCloud Hologram will offset losses from the drop in MicroCloud Hologram's long position.
The idea behind Methode Electronics and MicroCloud Hologram pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.

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