Correlation Between Mega Financial and Newretail

Can any of the company-specific risk be diversified away by investing in both Mega Financial and Newretail 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 Newretail 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 Newretail Co, you can compare the effects of market volatilities on Mega Financial and Newretail 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 Newretail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mega Financial and Newretail.

Diversification Opportunities for Mega Financial and Newretail

-0.79

Correlation Coefficient

Mega Financial  Newretail

Pay attention - limited upside

The 3 months correlation between Mega and Newretail is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and Newretail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newretail 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 Newretail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newretail has no effect on the direction of Mega Financial i.e., Mega Financial and Newretail go up and down completely randomly.

Pair Corralation between Mega Financial and Newretail

Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.21 times more return on investment than Newretail. However, Mega Financial Holding is 4.69 times less risky than Newretail. It trades about 0.03 of its potential returns per unit of risk. Newretail Co is currently generating about -0.01 per unit of risk. If you would invest  3,945  in Mega Financial Holding on December 30, 2024 and sell it today you would earn a total of  85.00  from holding Mega Financial Holding or generate 2.15% return on investment over 90 days.

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

Mega Financial Holding  vs.  Newretail Co

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.

Newretail

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newretail Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Mega Financial and Newretail

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

The idea behind Mega Financial Holding and Newretail Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.