Correlation Between Megawide Construction and Integrated Micro
Can any of the company-specific risk be diversified away by investing in both Megawide Construction and Integrated Micro 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 Integrated Micro 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 Integrated Micro Electronics, you can compare the effects of market volatilities on Megawide Construction and Integrated Micro 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 Integrated Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megawide Construction and Integrated Micro.
Diversification Opportunities for Megawide Construction and Integrated Micro
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Megawide and Integrated is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Megawide Construction Corp and Integrated Micro Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Micro Ele 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 Integrated Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Micro Ele has no effect on the direction of Megawide Construction i.e., Megawide Construction and Integrated Micro go up and down completely randomly.
Pair Corralation between Megawide Construction and Integrated Micro
Assuming the 90 days trading horizon Megawide Construction Corp is expected to generate 0.56 times more return on investment than Integrated Micro. However, Megawide Construction Corp is 1.78 times less risky than Integrated Micro. It trades about 0.12 of its potential returns per unit of risk. Integrated Micro Electronics is currently generating about -0.05 per unit of risk. If you would invest 9,060 in Megawide Construction Corp on September 12, 2024 and sell it today you would earn a total of 490.00 from holding Megawide Construction Corp or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 48.44% |
| Values | Daily Returns |
Megawide Construction Corp vs. Integrated Micro Electronics
Performance |
| Timeline |
| Megawide Construction |
| Integrated Micro Ele |
Megawide Construction and Integrated Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megawide Construction and Integrated Micro
The main advantage of trading using opposite Megawide Construction and Integrated Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megawide Construction position performs unexpectedly, Integrated Micro 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 Integrated Micro will offset losses from the drop in Integrated Micro's long position.The idea behind Megawide Construction Corp and Integrated Micro Electronics 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.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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