Correlation Between Mega Financial and Hannstar Display

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

Diversification Opportunities for Mega Financial and Hannstar Display

0.55

Correlation Coefficient

Mega Financial  Hannstar Display

Very weak diversification

The 3 months correlation between Mega and Hannstar is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and Hannstar Display Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannstar Display Corp 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 Hannstar Display. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannstar Display Corp has no effect on the direction of Mega Financial i.e., Mega Financial and Hannstar Display go up and down completely randomly.

Pair Corralation between Mega Financial and Hannstar Display

Assuming the 90 days trading horizon Mega Financial Holding is expected to generate 0.38 times more return on investment than Hannstar Display. However, Mega Financial Holding is 2.62 times less risky than Hannstar Display. It trades about 0.03 of its potential returns per unit of risk. Hannstar Display Corp is currently generating about 0.01 per unit of risk. If you would invest  3,865  in Mega Financial Holding on October 20, 2024 and sell it today you would earn a total of  15.00  from holding Mega Financial Holding or generate 0.39% return on investment over 90 days.

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

Mega Financial Holding  vs.  Hannstar Display Corp

Mega Financial Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hannstar Display Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hannstar Display Corp 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 February 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 Hannstar Display

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

The idea behind Mega Financial Holding and Hannstar Display Corp 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 Transaction History module to view history of all your transactions and understand their impact on performance.