Correlation Between Poya International and Merida Industry

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

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

Diversification Opportunities for Poya International and Merida Industry

0.86

Correlation Coefficient

Poya International  Merida Industry

Very poor diversification

The 3 months correlation between Poya and Merida is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Poya International Co and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry and Poya International 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 Poya International Co are associated (or correlated) with Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Poya International i.e., Poya International and Merida Industry go up and down completely randomly.

Pair Corralation between Poya International and Merida Industry

Assuming the 90 days trading horizon Poya International Co is expected to generate 0.5 times more return on investment than Merida Industry. However, Poya International Co is 1.98 times less risky than Merida Industry. It trades about 0.09 of its potential returns per unit of risk. Merida Industry Co is currently generating about -0.02 per unit of risk. If you would invest  48,350  in Poya International Co on September 22, 2024 and sell it today you would earn a total of  950.00  from holding Poya International Co or generate 1.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Poya International Co  vs.  Merida Industry Co

Poya International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poya International 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.

Merida Industry

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Poya International and Merida Industry

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

The idea behind Poya International Co and Merida Industry 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.