Correlation Between Del Monte and Megawide Construction

Can any of the company-specific risk be diversified away by investing in both Del Monte and Megawide Construction 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 Del Monte and Megawide Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Del Monte Pacific and Megawide Construction Corp, you can compare the effects of market volatilities on Del Monte and Megawide Construction 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 Del Monte with a short position of Megawide Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Del Monte and Megawide Construction.

Diversification Opportunities for Del Monte and Megawide Construction

-0.23

Correlation Coefficient

Del Monte  Megawide Construction

Very good diversification

The 3 months correlation between Del and Megawide is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Del Monte Pacific and Megawide Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Megawide Construction and Del Monte 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 Del Monte Pacific are associated (or correlated) with Megawide Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Megawide Construction has no effect on the direction of Del Monte i.e., Del Monte and Megawide Construction go up and down completely randomly.

Pair Corralation between Del Monte and Megawide Construction

Assuming the 90 days trading horizon Del Monte Pacific is expected to under-perform the Megawide Construction. In addition to that, Del Monte is 1.63 times more volatile than Megawide Construction Corp. It trades about -0.07 of its total potential returns per unit of risk. Megawide Construction Corp is currently generating about 0.06 per unit of volatility. If you would invest  9,203  in Megawide Construction Corp on September 26, 2024 and sell it today you would earn a total of  537.00  from holding Megawide Construction Corp or generate 5.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.11%
Values	Daily Returns

Del Monte Pacific  vs.  Megawide Construction Corp

Del Monte Pacific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Del Monte Pacific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Megawide Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Megawide Construction Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Megawide Construction may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Del Monte and Megawide Construction

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

The idea behind Del Monte Pacific and Megawide Construction 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.