Correlation Between Megawide Construction and Converge Information
Can any of the company-specific risk be diversified away by investing in both Megawide Construction and Converge Information 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 Converge Information 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 Converge Information Communications, you can compare the effects of market volatilities on Megawide Construction and Converge Information 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 Converge Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megawide Construction and Converge Information.
Diversification Opportunities for Megawide Construction and Converge Information
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Megawide and Converge is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Megawide Construction Corp and Converge Information Communica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Information 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 Converge Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Information has no effect on the direction of Megawide Construction i.e., Megawide Construction and Converge Information go up and down completely randomly.
Pair Corralation between Megawide Construction and Converge Information
Assuming the 90 days trading horizon Megawide Construction Corp is expected to generate 1.11 times more return on investment than Converge Information. However, Megawide Construction is 1.11 times more volatile than Converge Information Communications. It trades about 0.04 of its potential returns per unit of risk. Converge Information Communications is currently generating about 0.01 per unit of risk. If you would invest 8,714 in Megawide Construction Corp on October 22, 2024 and sell it today you would earn a total of 1,081 from holding Megawide Construction Corp or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 41.58% |
| Values | Daily Returns |
Megawide Construction Corp vs. Converge Information Communica
Performance |
| Timeline |
| Megawide Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Converge Information |
Megawide Construction and Converge Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megawide Construction and Converge Information
The main advantage of trading using opposite Megawide Construction and Converge Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megawide Construction position performs unexpectedly, Converge Information 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 Converge Information will offset losses from the drop in Converge Information's long position.| Megawide Construction vs. Atlas Consolidated Mining | Megawide Construction vs. Metropolitan Bank Trust | Megawide Construction vs. Allhome Corp | Megawide Construction vs. Manila Mining Corp |
| Converge Information vs. Semirara Mining Corp | Converge Information vs. Apex Mining Co | Converge Information vs. Globe Telecom | Converge Information vs. Philex Mining Corp |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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