Correlation Between Meiko Electronics and Halliburton

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

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

Diversification Opportunities for Meiko Electronics and Halliburton

0.49

Correlation Coefficient

Meiko Electronics  Halliburton

Very weak diversification

The 3 months correlation between Meiko and Halliburton is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Halliburton in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Halliburton and Meiko Electronics 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 Meiko Electronics Co are associated (or correlated) with Halliburton. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Halliburton has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Halliburton go up and down completely randomly.

Pair Corralation between Meiko Electronics and Halliburton

Assuming the 90 days horizon Meiko Electronics Co is expected to under-perform the Halliburton. But the stock apears to be less risky and, when comparing its historical volatility, Meiko Electronics Co is 1.54 times less risky than Halliburton. The stock trades about -0.06 of its potential returns per unit of risk. The Halliburton is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  2,560  in Halliburton on October 25, 2024 and sell it today you would earn a total of  306.00  from holding Halliburton or generate 11.95% return on investment over 90 days.

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

Meiko Electronics Co  vs.  Halliburton

Meiko Electronics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Meiko Electronics Co are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Meiko Electronics reported solid returns over the last few months and may actually be approaching a breakup point.

Halliburton

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Halliburton are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Halliburton may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Meiko Electronics and Halliburton

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

The idea behind Meiko Electronics Co and Halliburton 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.

Check out your portfolio center.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.