Correlation Between Power Wind and Mega Financial
Can any of the company-specific risk be diversified away by investing in both Power Wind and Mega Financial 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 Power Wind and Mega Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Power Wind Health and Mega Financial Holding, you can compare the effects of market volatilities on Power Wind and Mega Financial 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 Power Wind with a short position of Mega Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Wind and Mega Financial.
Diversification Opportunities for Power Wind and Mega Financial
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Power and Mega is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Power Wind Health and Mega Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega Financial Holding and Power Wind 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 Power Wind Health are associated (or correlated) with Mega Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega Financial Holding has no effect on the direction of Power Wind i.e., Power Wind and Mega Financial go up and down completely randomly.
Pair Corralation between Power Wind and Mega Financial
Assuming the 90 days trading horizon Power Wind Health is expected to under-perform the Mega Financial. In addition to that, Power Wind is 1.75 times more volatile than Mega Financial Holding. It trades about -0.23 of its total potential returns per unit of risk. Mega Financial Holding is currently generating about 0.04 per unit of volatility. If you would invest 3,900 in Mega Financial Holding on September 12, 2024 and sell it today you would earn a total of 70.00 from holding Mega Financial Holding or generate 1.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Power Wind Health vs. Mega Financial Holding
Performance |
Timeline |
Power Wind Health |
Mega Financial Holding |
Power Wind and Mega Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Power Wind and Mega Financial
The main advantage of trading using opposite Power Wind and Mega Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Power Wind position performs unexpectedly, Mega Financial 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 Financial will offset losses from the drop in Mega Financial's long position.Power Wind vs. Feng Tay Enterprises | Power Wind vs. Pou Chen Corp | Power Wind vs. Taiwan Paiho | Power Wind vs. Ruentex Development Co |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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