Correlation Between Meridianlink and EGain

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

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

Diversification Opportunities for Meridianlink and EGain

-0.47

Correlation Coefficient

Meridianlink  EGain

Very good diversification

The 3 months correlation between Meridianlink and EGain is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Meridianlink and eGain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on eGain and Meridianlink 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 Meridianlink are associated (or correlated) with EGain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of eGain has no effect on the direction of Meridianlink i.e., Meridianlink and EGain go up and down completely randomly.

Pair Corralation between Meridianlink and EGain

Given the investment horizon of 90 days Meridianlink is expected to under-perform the EGain. But the stock apears to be less risky and, when comparing its historical volatility, Meridianlink is 2.35 times less risky than EGain. The stock trades about -0.06 of its potential returns per unit of risk. The eGain is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  492.00  in eGain on October 21, 2024 and sell it today you would earn a total of  162.00  from holding eGain or generate 32.93% return on investment over 90 days.

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

Meridianlink  vs.  eGain

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

eGain

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in eGain are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, EGain displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Meridianlink and EGain

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

The idea behind Meridianlink and eGain 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.