Correlation Between Digilife Technologies and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both Digilife Technologies and Meiko Electronics 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 Digilife Technologies and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digilife Technologies Limited and Meiko Electronics Co, you can compare the effects of market volatilities on Digilife Technologies and Meiko Electronics 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 Digilife Technologies with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digilife Technologies and Meiko Electronics.
Diversification Opportunities for Digilife Technologies and Meiko Electronics
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Digilife and Meiko is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Digilife Technologies Limited and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and Digilife Technologies 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 Digilife Technologies Limited are associated (or correlated) with Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of Digilife Technologies i.e., Digilife Technologies and Meiko Electronics go up and down completely randomly.
Pair Corralation between Digilife Technologies and Meiko Electronics
Assuming the 90 days trading horizon Digilife Technologies Limited is expected to under-perform the Meiko Electronics. In addition to that, Digilife Technologies is 1.46 times more volatile than Meiko Electronics Co. It trades about -0.01 of its total potential returns per unit of risk. Meiko Electronics Co is currently generating about 0.1 per unit of volatility. If you would invest 2,540 in Meiko Electronics Co on September 14, 2024 and sell it today you would earn a total of 2,960 from holding Meiko Electronics Co or generate 116.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digilife Technologies Limited vs. Meiko Electronics Co
Performance |
| Timeline |
| Digilife Technologies |
| Meiko Electronics |
Digilife Technologies and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digilife Technologies and Meiko Electronics
The main advantage of trading using opposite Digilife Technologies and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digilife Technologies position performs unexpectedly, Meiko Electronics 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 Meiko Electronics will offset losses from the drop in Meiko Electronics' long position.| Digilife Technologies vs. Superior Plus Corp | Digilife Technologies vs. SIVERS SEMICONDUCTORS AB | Digilife Technologies vs. Norsk Hydro ASA | Digilife Technologies vs. Reliance Steel Aluminum |
| Meiko Electronics vs. Benchmark Electronics | Meiko Electronics vs. Superior Plus Corp | Meiko Electronics vs. SIVERS SEMICONDUCTORS AB | Meiko Electronics vs. Norsk Hydro ASA |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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