Correlation Between Merry Electronics and Primax Electronics
Can any of the company-specific risk be diversified away by investing in both Merry Electronics and Primax 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 Merry Electronics and Primax Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merry Electronics Co and Primax Electronics, you can compare the effects of market volatilities on Merry Electronics and Primax 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 Merry Electronics with a short position of Primax Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merry Electronics and Primax Electronics.
Diversification Opportunities for Merry Electronics and Primax Electronics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Merry and Primax is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Merry Electronics Co and Primax Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primax Electronics and Merry Electronics 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 Merry Electronics Co are associated (or correlated) with Primax Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primax Electronics has no effect on the direction of Merry Electronics i.e., Merry Electronics and Primax Electronics go up and down completely randomly.
Pair Corralation between Merry Electronics and Primax Electronics
Assuming the 90 days trading horizon Merry Electronics Co is expected to generate 1.22 times more return on investment than Primax Electronics. However, Merry Electronics is 1.22 times more volatile than Primax Electronics. It trades about 0.13 of its potential returns per unit of risk. Primax Electronics is currently generating about 0.1 per unit of risk. If you would invest 10,750 in Merry Electronics Co on December 29, 2024 and sell it today you would earn a total of 1,550 from holding Merry Electronics Co or generate 14.42% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.25% |
Values | Daily Returns |
Merry Electronics Co vs. Primax Electronics
Performance |
Timeline |
Merry Electronics |
Primax Electronics |
Merry Electronics and Primax Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merry Electronics and Primax Electronics
The main advantage of trading using opposite Merry Electronics and Primax Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merry Electronics position performs unexpectedly, Primax 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 Primax Electronics will offset losses from the drop in Primax Electronics' long position.Merry Electronics vs. Chunghwa Telecom Co | Merry Electronics vs. Cleanaway Co | Merry Electronics vs. Energenesis Biomedical Co | Merry Electronics vs. Central Reinsurance Corp |
Primax Electronics vs. Flexium Interconnect | Primax Electronics vs. Radiant Opto Electronics Corp | Primax Electronics vs. Merry Electronics Co | Primax Electronics vs. BizLink Holding |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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