Correlation Between PDS Biotechnology and Meiko Electronics

Can any of the company-specific risk be diversified away by investing in both PDS Biotechnology and Meiko Electronics 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 PDS Biotechnology and Meiko Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PDS Biotechnology Corp and Meiko Electronics Co, you can compare the effects of market volatilities on PDS Biotechnology and Meiko Electronics 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 PDS Biotechnology with a short position of Meiko Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of PDS Biotechnology and Meiko Electronics.

Diversification Opportunities for PDS Biotechnology and Meiko Electronics

0.82

Correlation Coefficient

PDS Biotechnology  Meiko Electronics

Very poor diversification

The 3 months correlation between PDS and Meiko is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PDS Biotechnology Corp and Meiko Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meiko Electronics and PDS Biotechnology 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 PDS Biotechnology Corp are associated (or correlated) with Meiko Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meiko Electronics has no effect on the direction of PDS Biotechnology i.e., PDS Biotechnology and Meiko Electronics go up and down completely randomly.

Pair Corralation between PDS Biotechnology and Meiko Electronics

Assuming the 90 days horizon PDS Biotechnology Corp is expected to under-perform the Meiko Electronics. In addition to that, PDS Biotechnology is 2.05 times more volatile than Meiko Electronics Co. It trades about -0.1 of its total potential returns per unit of risk. Meiko Electronics Co is currently generating about -0.12 per unit of volatility. If you would invest  5,550  in Meiko Electronics Co on December 19, 2024 and sell it today you would lose (1,070) from holding Meiko Electronics Co or give up 19.28% of portfolio value over 90 days.

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

PDS Biotechnology Corp  vs.  Meiko Electronics Co

PDS Biotechnology Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PDS Biotechnology Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Meiko Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Meiko Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PDS Biotechnology and Meiko Electronics

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

The idea behind PDS Biotechnology Corp and Meiko Electronics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.