Correlation Between Megawide Construction and Alliance Global
Can any of the company-specific risk be diversified away by investing in both Megawide Construction and Alliance Global 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 Megawide Construction and Alliance Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Megawide Construction Corp and Alliance Global Group, you can compare the effects of market volatilities on Megawide Construction and Alliance Global 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 Megawide Construction with a short position of Alliance Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megawide Construction and Alliance Global.
Diversification Opportunities for Megawide Construction and Alliance Global
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Megawide and Alliance is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Megawide Construction Corp and Alliance Global Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Global Group and Megawide Construction 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 Megawide Construction Corp are associated (or correlated) with Alliance Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Global Group has no effect on the direction of Megawide Construction i.e., Megawide Construction and Alliance Global go up and down completely randomly.
Pair Corralation between Megawide Construction and Alliance Global
Assuming the 90 days trading horizon Megawide Construction Corp is expected to generate 1.25 times more return on investment than Alliance Global. However, Megawide Construction is 1.25 times more volatile than Alliance Global Group. It trades about 0.04 of its potential returns per unit of risk. Alliance Global Group is currently generating about -0.05 per unit of risk. If you would invest 8,569 in Megawide Construction Corp on December 4, 2024 and sell it today you would earn a total of 1,306 from holding Megawide Construction Corp or generate 15.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 42.29% |
| Values | Daily Returns |
Megawide Construction Corp vs. Alliance Global Group
Performance |
| Timeline |
| Megawide Construction |
| Alliance Global Group |
Megawide Construction and Alliance Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megawide Construction and Alliance Global
The main advantage of trading using opposite Megawide Construction and Alliance Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megawide Construction position performs unexpectedly, Alliance Global 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 Alliance Global will offset losses from the drop in Alliance Global's long position.| Megawide Construction vs. Top Frontier Investment | Megawide Construction vs. Sun Life Financial | Megawide Construction vs. Lepanto Consolidated Mining | Megawide Construction vs. COL Financial Group |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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