Correlation Between Mega Financial and Max Zipper

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

Diversification Opportunities for Mega Financial and Max Zipper

-0.31

Correlation Coefficient

Mega Financial  Max Zipper

Very good diversification

The 3 months correlation between Mega and Max is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mega Financial Holding and Max Zipper Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Max Zipper 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 Max Zipper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Max Zipper has no effect on the direction of Mega Financial i.e., Mega Financial and Max Zipper go up and down completely randomly.

Pair Corralation between Mega Financial and Max Zipper

Assuming the 90 days trading horizon Mega Financial Holding is expected to under-perform the Max Zipper. But the stock apears to be less risky and, when comparing its historical volatility, Mega Financial Holding is 1.97 times less risky than Max Zipper. The stock trades about -0.14 of its potential returns per unit of risk. The Max Zipper Co is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  8,680  in Max Zipper Co on September 22, 2024 and sell it today you would earn a total of  780.00  from holding Max Zipper Co or generate 8.99% 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.  Max Zipper Co

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Max Zipper

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Max Zipper Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Max Zipper may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mega Financial and Max Zipper

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

The idea behind Mega Financial Holding and Max Zipper 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.