Correlation Between Meiko Electronics and Identiv

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

Diversification Opportunities for Meiko Electronics and Identiv

0.69

Correlation Coefficient

Meiko Electronics  Identiv

Poor diversification

The 3 months correlation between Meiko and Identiv is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Meiko Electronics Co and Identiv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Identiv 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 Identiv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Identiv has no effect on the direction of Meiko Electronics i.e., Meiko Electronics and Identiv go up and down completely randomly.

Pair Corralation between Meiko Electronics and Identiv

Assuming the 90 days horizon Meiko Electronics Co is expected to under-perform the Identiv. But the stock apears to be less risky and, when comparing its historical volatility, Meiko Electronics Co is 1.4 times less risky than Identiv. The stock trades about -0.13 of its potential returns per unit of risk. The Identiv is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  348.00  in Identiv on December 30, 2024 and sell it today you would lose (52.00) from holding Identiv or give up 14.94% of portfolio value over 90 days.

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

Meiko Electronics Co  vs.  Identiv

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 unfluctuating 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.

Identiv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Identiv has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Meiko Electronics and Identiv

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

The idea behind Meiko Electronics Co and Identiv 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.