Correlation Between Megawide Construction and Apex Mining

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

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

Diversification Opportunities for Megawide Construction and Apex Mining

-0.6

Correlation Coefficient

Megawide Construction  Apex Mining

Excellent diversification

The 3 months correlation between Megawide and Apex is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Megawide Construction Corp and Apex Mining Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apex Mining and Megawide Construction 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 Megawide Construction Corp are associated (or correlated) with Apex Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apex Mining has no effect on the direction of Megawide Construction i.e., Megawide Construction and Apex Mining go up and down completely randomly.

Pair Corralation between Megawide Construction and Apex Mining

Assuming the 90 days trading horizon Megawide Construction Corp is expected to generate 0.9 times more return on investment than Apex Mining. However, Megawide Construction Corp is 1.11 times less risky than Apex Mining. It trades about 0.05 of its potential returns per unit of risk. Apex Mining Co is currently generating about -0.14 per unit of risk. If you would invest  9,341  in Megawide Construction Corp on October 5, 2024 and sell it today you would earn a total of  159.00  from holding Megawide Construction Corp or generate 1.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	46.55%
Values	Daily Returns

Megawide Construction Corp  vs.  Apex Mining Co

Megawide Construction

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Megawide Construction Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Megawide Construction is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Apex Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Apex Mining Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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 Megawide Construction and Apex Mining

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

The idea behind Megawide Construction Corp and Apex Mining Co 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.