Correlation Between Megawide Construction and Axelum Resources

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

Diversification Opportunities for Megawide Construction and Axelum Resources

-0.19

Correlation Coefficient

Megawide Construction  Axelum Resources

Good diversification

The 3 months correlation between Megawide and Axelum is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Megawide Construction Corp and Axelum Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axelum Resources Corp 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 Axelum Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axelum Resources Corp has no effect on the direction of Megawide Construction i.e., Megawide Construction and Axelum Resources go up and down completely randomly.

Pair Corralation between Megawide Construction and Axelum Resources

Assuming the 90 days trading horizon Megawide Construction Corp is expected to generate 0.66 times more return on investment than Axelum Resources. However, Megawide Construction Corp is 1.5 times less risky than Axelum Resources. It trades about 0.04 of its potential returns per unit of risk. Axelum Resources Corp is currently generating about 0.01 per unit of risk. If you would invest  8,795  in Megawide Construction Corp on October 5, 2024 and sell it today you would earn a total of  705.00  from holding Megawide Construction Corp or generate 8.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.77%
Values	Daily Returns

Megawide Construction Corp  vs.  Axelum Resources Corp

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.

Axelum Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Axelum Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Axelum Resources is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Megawide Construction and Axelum Resources

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

The idea behind Megawide Construction Corp and Axelum Resources Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.