Correlation Between Mega Financial and Sinopac Financial

Can any of the company-specific risk be diversified away by investing in both Mega Financial and Sinopac Financial 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 Mega Financial and Sinopac Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mega Financial Holding and Sinopac Financial Holdings, you can compare the effects of market volatilities on Mega Financial and Sinopac Financial 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 Mega Financial with a short position of Sinopac Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and Sinopac Financial.

Diversification Opportunities for Mega Financial and Sinopac Financial

-0.22

Correlation Coefficient

Mega Financial  Sinopac Financial

Very good diversification

The 3 months correlation between Mega and Sinopac is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and Sinopac Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinopac Financial and Mega Financial 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 Mega Financial Holding are associated (or correlated) with Sinopac Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinopac Financial has no effect on the direction of Mega Financial i.e., Mega Financial and Sinopac Financial go up and down completely randomly.

Pair Corralation between Mega Financial and Sinopac Financial

Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.78 times more return on investment than Sinopac Financial. However, Mega Financial Holding is 1.28 times less risky than Sinopac Financial. It trades about 0.11 of its potential returns per unit of risk. Sinopac Financial Holdings is currently generating about -0.07 per unit of risk. If you would invest  3,880  in Mega Financial Holding on December 30, 2024 and sell it today you would earn a total of  150.00  from holding Mega Financial Holding or generate 3.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Mega Financial Holding  vs.  Sinopac Financial Holdings

Mega Financial Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mega Financial Holding are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Mega Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Sinopac Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sinopac Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Sinopac Financial is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Mega Financial and Sinopac Financial

The main advantage of trading using opposite Mega Financial and Sinopac Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mega Financial position performs unexpectedly, Sinopac Financial 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 Sinopac Financial will offset losses from the drop in Sinopac Financial's long position.

The idea behind Mega Financial Holding and Sinopac Financial Holdings 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.