Correlation Between Merida Industry and Uni President

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

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

Diversification Opportunities for Merida Industry and Uni President

0.61

Correlation Coefficient

Merida Industry  Uni President

Poor diversification

The 3 months correlation between Merida and Uni is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Uni President Enterprises Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Uni President Enterp and Merida Industry 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 Merida Industry Co are associated (or correlated) with Uni President. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Uni President Enterp has no effect on the direction of Merida Industry i.e., Merida Industry and Uni President go up and down completely randomly.

Pair Corralation between Merida Industry and Uni President

Assuming the 90 days trading horizon Merida Industry is expected to generate 5.3 times less return on investment than Uni President. In addition to that, Merida Industry is 2.13 times more volatile than Uni President Enterprises Corp. It trades about 0.0 of its total potential returns per unit of risk. Uni President Enterprises Corp is currently generating about 0.05 per unit of volatility. If you would invest  6,365  in Uni President Enterprises Corp on September 22, 2024 and sell it today you would earn a total of  1,735  from holding Uni President Enterprises Corp or generate 27.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.79%
Values	Daily Returns

Merida Industry Co  vs.  Uni President Enterprises Corp

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.

Uni President Enterp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Uni President Enterprises Corp 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 Merida Industry and Uni President

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

The idea behind Merida Industry Co and Uni President Enterprises Corp 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..