Correlation Between Radiant Opto and Merry Electronics
Can any of the company-specific risk be diversified away by investing in both Radiant Opto and Merry Electronics 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 Radiant Opto and Merry Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Radiant Opto Electronics Corp and Merry Electronics Co, you can compare the effects of market volatilities on Radiant Opto and Merry Electronics 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 Radiant Opto with a short position of Merry Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Radiant Opto and Merry Electronics.
Diversification Opportunities for Radiant Opto and Merry Electronics
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Radiant and Merry is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Radiant Opto Electronics Corp and Merry Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merry Electronics and Radiant Opto 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 Radiant Opto Electronics Corp are associated (or correlated) with Merry Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merry Electronics has no effect on the direction of Radiant Opto i.e., Radiant Opto and Merry Electronics go up and down completely randomly.
Pair Corralation between Radiant Opto and Merry Electronics
Assuming the 90 days trading horizon Radiant Opto is expected to generate 3.7 times less return on investment than Merry Electronics. But when comparing it to its historical volatility, Radiant Opto Electronics Corp is 1.36 times less risky than Merry Electronics. It trades about 0.03 of its potential returns per unit of risk. Merry Electronics Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 10,800 in Merry Electronics Co on December 4, 2024 and sell it today you would earn a total of 750.00 from holding Merry Electronics Co or generate 6.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Radiant Opto Electronics Corp vs. Merry Electronics Co
Performance |
Timeline |
Radiant Opto Electro |
Merry Electronics |
Radiant Opto and Merry Electronics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Radiant Opto and Merry Electronics
The main advantage of trading using opposite Radiant Opto and Merry Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radiant Opto position performs unexpectedly, Merry Electronics 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 Merry Electronics will offset losses from the drop in Merry Electronics' long position.Radiant Opto vs. Powertech Technology | Radiant Opto vs. Catcher Technology Co | Radiant Opto vs. Novatek Microelectronics Corp | Radiant Opto vs. Wistron Corp |
Merry Electronics vs. ESUN Financial Holding | Merry Electronics vs. Standard Foods Corp | Merry Electronics vs. Chinese Maritime Transport | Merry Electronics vs. Hunya Foods Co |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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