Correlation Between Merida Industry and O TA

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

Diversification Opportunities for Merida Industry and O TA

0.79

Correlation Coefficient

Merida Industry  O TA

Poor diversification

The 3 months correlation between Merida and 8924 is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and O TA Precision Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on O TA Precision 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 O TA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of O TA Precision has no effect on the direction of Merida Industry i.e., Merida Industry and O TA go up and down completely randomly.

Pair Corralation between Merida Industry and O TA

Assuming the 90 days trading horizon Merida Industry Co is expected to under-perform the O TA. In addition to that, Merida Industry is 2.23 times more volatile than O TA Precision Industry. It trades about -0.09 of its total potential returns per unit of risk. O TA Precision Industry is currently generating about -0.1 per unit of volatility. If you would invest  9,020  in O TA Precision Industry on September 19, 2024 and sell it today you would lose (1,280) from holding O TA Precision Industry or give up 14.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.21%
Values	Daily Returns

Merida Industry Co  vs.  O TA Precision Industry

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.

O TA Precision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days O TA Precision Industry 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 O TA

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

The idea behind Merida Industry Co and O TA Precision Industry 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.