Correlation Between MIC Electronics and MIRC Electronics

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

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

Diversification Opportunities for MIC Electronics and MIRC Electronics

-0.02

Correlation Coefficient

MIC Electronics  MIRC Electronics

Good diversification

The 3 months correlation between MIC and MIRC is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding MIC Electronics Limited and MIRC Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MIRC Electronics and MIC 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 MIC Electronics Limited are associated (or correlated) with MIRC Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MIRC Electronics has no effect on the direction of MIC Electronics i.e., MIC Electronics and MIRC Electronics go up and down completely randomly.

Pair Corralation between MIC Electronics and MIRC Electronics

Assuming the 90 days trading horizon MIC Electronics Limited is expected to under-perform the MIRC Electronics. But the stock apears to be less risky and, when comparing its historical volatility, MIC Electronics Limited is 1.07 times less risky than MIRC Electronics. The stock trades about -0.08 of its potential returns per unit of risk. The MIRC Electronics Limited is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,127  in MIRC Electronics Limited on August 31, 2024 and sell it today you would lose (56.00) from holding MIRC Electronics Limited or give up 2.63% of portfolio value over 90 days.

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

MIC Electronics Limited  vs.  MIRC Electronics Limited

MIC Electronics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MIC Electronics Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, MIC Electronics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

MIRC Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MIRC Electronics Limited 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 fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with MIC Electronics and MIRC Electronics

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

The idea behind MIC Electronics Limited and MIRC Electronics Limited 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.

Check out your portfolio center.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.