Correlation Between Packaging and Meiko Electronics
Can any of the company-specific risk be diversified away by investing in both Packaging 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 Packaging and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Packaging of and Meiko Electronics Co, you can compare the effects of market volatilities on Packaging 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 Packaging with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Packaging and Meiko Electronics.
Diversification Opportunities for Packaging and Meiko Electronics
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Packaging and Meiko is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Packaging of and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and Packaging 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 Packaging of 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 Packaging i.e., Packaging and Meiko Electronics go up and down completely randomly.
Pair Corralation between Packaging and Meiko Electronics
Assuming the 90 days horizon Packaging is expected to generate 1.89 times less return on investment than Meiko Electronics. But when comparing it to its historical volatility, Packaging of is 2.22 times less risky than Meiko Electronics. It trades about 0.11 of its potential returns per unit of risk. Meiko Electronics Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,740 in Meiko Electronics Co on September 13, 2024 and sell it today you would earn a total of 3,810 from holding Meiko Electronics Co or generate 218.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Packaging of vs. Meiko Electronics Co
Performance |
| Timeline |
| Packaging |
| Meiko Electronics |
Packaging and Meiko Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Packaging and Meiko Electronics
The main advantage of trading using opposite Packaging and Meiko Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Packaging 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.| Packaging vs. Graphic Packaging Holding | Packaging vs. Superior Plus Corp | Packaging vs. SIVERS SEMICONDUCTORS AB | Packaging vs. Norsk Hydro ASA |
| 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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