Correlation Between Piotech and Mega-info Media

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

By analyzing existing cross correlation between Piotech Inc A and Mega info Media CoLtd, you can compare the effects of market volatilities on Piotech and Mega-info Media 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 Piotech with a short position of Mega-info Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Piotech and Mega-info Media.

Diversification Opportunities for Piotech and Mega-info Media

0.18

Correlation Coefficient

Piotech  Mega-info Media

Average diversification

The 3 months correlation between Piotech and Mega-info is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Piotech Inc A and Mega info Media CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega info Media and Piotech 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 Piotech Inc A are associated (or correlated) with Mega-info Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega info Media has no effect on the direction of Piotech i.e., Piotech and Mega-info Media go up and down completely randomly.

Pair Corralation between Piotech and Mega-info Media

Assuming the 90 days trading horizon Piotech Inc A is expected to generate 1.13 times more return on investment than Mega-info Media. However, Piotech is 1.13 times more volatile than Mega info Media CoLtd. It trades about 0.0 of its potential returns per unit of risk. Mega info Media CoLtd is currently generating about -0.06 per unit of risk. If you would invest  17,010  in Piotech Inc A on December 24, 2024 and sell it today you would lose (264.00) from holding Piotech Inc A or give up 1.55% of portfolio value over 90 days.

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

Piotech Inc A  vs.  Mega info Media CoLtd

Piotech Inc A

Risk-Adjusted Performance

Very Weak

Over the last 90 days Piotech Inc A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Piotech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mega info Media

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mega info Media CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Piotech and Mega-info Media

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

The idea behind Piotech Inc A and Mega info Media CoLtd 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.