Correlation Between Kukil Metal and Mercury Corp

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

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

Diversification Opportunities for Kukil Metal and Mercury Corp

0.61

Correlation Coefficient

Kukil Metal  Mercury Corp

Poor diversification

The 3 months correlation between Kukil and Mercury is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Kukil Metal Co and Mercury Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Corp and Kukil Metal 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 Kukil Metal Co are associated (or correlated) with Mercury Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Corp has no effect on the direction of Kukil Metal i.e., Kukil Metal and Mercury Corp go up and down completely randomly.

Pair Corralation between Kukil Metal and Mercury Corp

Assuming the 90 days trading horizon Kukil Metal Co is expected to generate 0.46 times more return on investment than Mercury Corp. However, Kukil Metal Co is 2.16 times less risky than Mercury Corp. It trades about -0.01 of its potential returns per unit of risk. Mercury Corp is currently generating about -0.15 per unit of risk. If you would invest  169,692  in Kukil Metal Co on December 24, 2024 and sell it today you would lose (1,292) from holding Kukil Metal Co or give up 0.76% of portfolio value over 90 days.

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

Kukil Metal Co  vs.  Mercury Corp

Kukil Metal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kukil Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Kukil Metal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mercury Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mercury Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Kukil Metal and Mercury Corp

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

The idea behind Kukil Metal Co and Mercury 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.