Correlation Between MIRC Electronics and Power Mech

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

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

Diversification Opportunities for MIRC Electronics and Power Mech

0.03

Correlation Coefficient

MIRC Electronics  Power Mech

Significant diversification

The 3 months correlation between MIRC and Power is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding MIRC Electronics Limited and Power Mech Projects in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Mech Projects and MIRC 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 MIRC Electronics Limited are associated (or correlated) with Power Mech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Mech Projects has no effect on the direction of MIRC Electronics i.e., MIRC Electronics and Power Mech go up and down completely randomly.

Pair Corralation between MIRC Electronics and Power Mech

Assuming the 90 days trading horizon MIRC Electronics Limited is expected to generate 1.17 times more return on investment than Power Mech. However, MIRC Electronics is 1.17 times more volatile than Power Mech Projects. It trades about 0.06 of its potential returns per unit of risk. Power Mech Projects is currently generating about -0.09 per unit of risk. If you would invest  2,046  in MIRC Electronics Limited on October 26, 2024 and sell it today you would earn a total of  192.00  from holding MIRC Electronics Limited or generate 9.38% return on investment over 90 days.

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

MIRC Electronics Limited  vs.  Power Mech Projects

MIRC Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MIRC Electronics Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal fundamental indicators, MIRC Electronics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Power Mech Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Mech Projects has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MIRC Electronics and Power Mech

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

The idea behind MIRC Electronics Limited and Power Mech Projects 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.