Correlation Between Megawide Construction and Crown Asia
Can any of the company-specific risk be diversified away by investing in both Megawide Construction and Crown Asia 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 Crown Asia 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 Crown Asia Chemicals, you can compare the effects of market volatilities on Megawide Construction and Crown Asia 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 Crown Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megawide Construction and Crown Asia.
Diversification Opportunities for Megawide Construction and Crown Asia
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Megawide and Crown is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Megawide Construction Corp and Crown Asia Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crown Asia Chemicals 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 Crown Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crown Asia Chemicals has no effect on the direction of Megawide Construction i.e., Megawide Construction and Crown Asia go up and down completely randomly.
Pair Corralation between Megawide Construction and Crown Asia
Assuming the 90 days trading horizon Megawide Construction Corp is expected to generate 0.41 times more return on investment than Crown Asia. However, Megawide Construction Corp is 2.46 times less risky than Crown Asia. It trades about 0.43 of its potential returns per unit of risk. Crown Asia Chemicals is currently generating about 0.0 per unit of risk. If you would invest 9,440 in Megawide Construction Corp on September 13, 2024 and sell it today you would earn a total of 350.00 from holding Megawide Construction Corp or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 43.48% |
| Values | Daily Returns |
Megawide Construction Corp vs. Crown Asia Chemicals
Performance |
| Timeline |
| Megawide Construction |
| Crown Asia Chemicals |
Megawide Construction and Crown Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megawide Construction and Crown Asia
The main advantage of trading using opposite Megawide Construction and Crown Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megawide Construction position performs unexpectedly, Crown Asia 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 Crown Asia will offset losses from the drop in Crown Asia's long position.| Megawide Construction vs. Araneta Properties | Megawide Construction vs. GT Capital Holdings | Megawide Construction vs. Allhome Corp | Megawide Construction vs. Jollibee Foods Corp |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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