Correlation Between Megawide Construction and Pacificonline Systems
Can any of the company-specific risk be diversified away by investing in both Megawide Construction and Pacificonline Systems 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 Pacificonline Systems 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 Pacificonline Systems, you can compare the effects of market volatilities on Megawide Construction and Pacificonline Systems 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 Pacificonline Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megawide Construction and Pacificonline Systems.
Diversification Opportunities for Megawide Construction and Pacificonline Systems
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Megawide and Pacificonline is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Megawide Construction Corp and Pacificonline Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacificonline Systems 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 Pacificonline Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacificonline Systems has no effect on the direction of Megawide Construction i.e., Megawide Construction and Pacificonline Systems go up and down completely randomly.
Pair Corralation between Megawide Construction and Pacificonline Systems
Assuming the 90 days trading horizon Megawide Construction Corp is expected to generate 0.2 times more return on investment than Pacificonline Systems. However, Megawide Construction Corp is 4.95 times less risky than Pacificonline Systems. It trades about 0.43 of its potential returns per unit of risk. Pacificonline Systems is currently generating about -0.09 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 | Weak |
| Accuracy | 45.45% |
| Values | Daily Returns |
Megawide Construction Corp vs. Pacificonline Systems
Performance |
| Timeline |
| Megawide Construction |
| Pacificonline Systems |
Megawide Construction and Pacificonline Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Megawide Construction and Pacificonline Systems
The main advantage of trading using opposite Megawide Construction and Pacificonline Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Megawide Construction position performs unexpectedly, Pacificonline Systems 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 Pacificonline Systems will offset losses from the drop in Pacificonline Systems' long position.| Megawide Construction vs. Araneta Properties | Megawide Construction vs. GT Capital Holdings | Megawide Construction vs. Allhome Corp | Megawide Construction vs. Jollibee Foods Corp |
| Pacificonline Systems vs. Premiere Entertainment | Pacificonline Systems vs. SM Investments Corp | Pacificonline Systems vs. Alliance Select Foods | Pacificonline Systems vs. Century Pacific Food |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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