Correlation Between Merida Industry and Gordon Auto

Can any of the company-specific risk be diversified away by investing in both Merida Industry and Gordon Auto 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 Gordon Auto 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 Gordon Auto Body, you can compare the effects of market volatilities on Merida Industry and Gordon Auto 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 Gordon Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merida Industry and Gordon Auto.

Diversification Opportunities for Merida Industry and Gordon Auto

0.0

Correlation Coefficient

Merida Industry  Gordon Auto

Pay attention - limited upside

The 3 months correlation between Merida and Gordon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Gordon Auto Body in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gordon Auto Body 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 Gordon Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gordon Auto Body has no effect on the direction of Merida Industry i.e., Merida Industry and Gordon Auto go up and down completely randomly.

Pair Corralation between Merida Industry and Gordon Auto

If you would invest (100.00) in Gordon Auto Body on October 1, 2024 and sell it today you would earn a total of  100.00  from holding Gordon Auto Body or generate -100.0% return on investment over 90 days.

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

Merida Industry Co  vs.  Gordon Auto Body

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 fairly stable basic indicators, Merida Industry is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Gordon Auto Body

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gordon Auto Body are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Gordon Auto may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Merida Industry and Gordon Auto

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

The idea behind Merida Industry Co and Gordon Auto Body 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.