Correlation Between Merida Industry and Chlitina Holding

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

Diversification Opportunities for Merida Industry and Chlitina Holding

0.69

Correlation Coefficient

Merida Industry  Chlitina Holding

Poor diversification

The 3 months correlation between Merida and Chlitina is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Chlitina Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chlitina Holding 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 Chlitina Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chlitina Holding has no effect on the direction of Merida Industry i.e., Merida Industry and Chlitina Holding go up and down completely randomly.

Pair Corralation between Merida Industry and Chlitina Holding

Assuming the 90 days trading horizon Merida Industry is expected to generate 3.48 times less return on investment than Chlitina Holding. In addition to that, Merida Industry is 1.31 times more volatile than Chlitina Holding. It trades about 0.03 of its total potential returns per unit of risk. Chlitina Holding is currently generating about 0.12 per unit of volatility. If you would invest  10,600  in Chlitina Holding on December 30, 2024 and sell it today you would earn a total of  1,300  from holding Chlitina Holding or generate 12.26% return on investment over 90 days.

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

Merida Industry Co  vs.  Chlitina Holding

Merida Industry

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Merida Industry Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Merida Industry is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Chlitina Holding

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Chlitina Holding are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chlitina Holding showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Merida Industry and Chlitina Holding

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

The idea behind Merida Industry Co and Chlitina Holding 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.