Correlation Between Shinih Enterprise and Merida Industry

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

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

Diversification Opportunities for Shinih Enterprise and Merida Industry

0.02

Correlation Coefficient

Shinih Enterprise  Merida Industry

Significant diversification

The 3 months correlation between Shinih and Merida is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Shinih Enterprise Co and Merida Industry Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merida Industry and Shinih Enterprise 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 Shinih Enterprise Co are associated (or correlated) with Merida Industry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merida Industry has no effect on the direction of Shinih Enterprise i.e., Shinih Enterprise and Merida Industry go up and down completely randomly.

Pair Corralation between Shinih Enterprise and Merida Industry

Assuming the 90 days trading horizon Shinih Enterprise Co is expected to under-perform the Merida Industry. But the stock apears to be less risky and, when comparing its historical volatility, Shinih Enterprise Co is 3.61 times less risky than Merida Industry. The stock trades about -0.11 of its potential returns per unit of risk. The Merida Industry Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  15,250  in Merida Industry Co on December 29, 2024 and sell it today you would earn a total of  300.00  from holding Merida Industry Co or generate 1.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.25%
Values	Daily Returns

Shinih Enterprise Co  vs.  Merida Industry Co

Shinih Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shinih Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Shinih Enterprise is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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.

Pair Trading with Shinih Enterprise and Merida Industry

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

The idea behind Shinih Enterprise Co and Merida Industry Co 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..