Correlation Between Axiomtek and Meiloon Industrial

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

By analyzing existing cross correlation between Axiomtek Co and Meiloon Industrial Co, you can compare the effects of market volatilities on Axiomtek and Meiloon Industrial 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 Axiomtek with a short position of Meiloon Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axiomtek and Meiloon Industrial.

Diversification Opportunities for Axiomtek and Meiloon Industrial

-0.25

Correlation Coefficient

Axiomtek  Meiloon Industrial

Very good diversification

The 3 months correlation between Axiomtek and Meiloon is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Axiomtek Co and Meiloon Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiloon Industrial and Axiomtek 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 Axiomtek Co are associated (or correlated) with Meiloon Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiloon Industrial has no effect on the direction of Axiomtek i.e., Axiomtek and Meiloon Industrial go up and down completely randomly.

Pair Corralation between Axiomtek and Meiloon Industrial

Assuming the 90 days trading horizon Axiomtek Co is expected to generate 2.01 times more return on investment than Meiloon Industrial. However, Axiomtek is 2.01 times more volatile than Meiloon Industrial Co. It trades about 0.2 of its potential returns per unit of risk. Meiloon Industrial Co is currently generating about -0.39 per unit of risk. If you would invest  10,750  in Axiomtek Co on October 8, 2024 and sell it today you would earn a total of  1,550  from holding Axiomtek Co or generate 14.42% return on investment over 90 days.

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

Axiomtek Co  vs.  Meiloon Industrial Co

Axiomtek

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axiomtek Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Axiomtek showed solid returns over the last few months and may actually be approaching a breakup point.

Meiloon Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meiloon Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Axiomtek and Meiloon Industrial

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

The idea behind Axiomtek Co and Meiloon Industrial 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.