Correlation Between Megacable Holdings and Regional SAB

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

By analyzing existing cross correlation between Megacable Holdings S and Regional SAB de, you can compare the effects of market volatilities on Megacable Holdings and Regional SAB 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 Megacable Holdings with a short position of Regional SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Megacable Holdings and Regional SAB.

Diversification Opportunities for Megacable Holdings and Regional SAB

0.79

Correlation Coefficient

Megacable Holdings  Regional SAB

Poor diversification

The 3 months correlation between Megacable and Regional is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Megacable Holdings S and Regional SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional SAB de and Megacable Holdings 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 Megacable Holdings S are associated (or correlated) with Regional SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional SAB de has no effect on the direction of Megacable Holdings i.e., Megacable Holdings and Regional SAB go up and down completely randomly.

Pair Corralation between Megacable Holdings and Regional SAB

Assuming the 90 days trading horizon Megacable Holdings S is expected to generate 1.0 times more return on investment than Regional SAB. However, Megacable Holdings S is 1.0 times less risky than Regional SAB. It trades about 0.17 of its potential returns per unit of risk. Regional SAB de is currently generating about 0.16 per unit of risk. If you would invest  3,349  in Megacable Holdings S on December 25, 2024 and sell it today you would earn a total of  781.00  from holding Megacable Holdings S or generate 23.32% return on investment over 90 days.

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

Megacable Holdings S  vs.  Regional SAB de

Megacable Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Megacable Holdings S are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Megacable Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Regional SAB de

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Regional SAB de are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating primary indicators, Regional SAB showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Megacable Holdings and Regional SAB

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

The idea behind Megacable Holdings S and Regional SAB de 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.