Correlation Between PJ Metal and Mercury

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

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

Diversification Opportunities for PJ Metal and Mercury

-0.11

Correlation Coefficient

PJ Metal  Mercury

Good diversification

The 3 months correlation between 128660 and Mercury is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding PJ Metal Co and Mercury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury and PJ 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 PJ Metal Co are associated (or correlated) with Mercury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury has no effect on the direction of PJ Metal i.e., PJ Metal and Mercury go up and down completely randomly.

Pair Corralation between PJ Metal and Mercury

Assuming the 90 days trading horizon PJ Metal is expected to generate 1.37 times less return on investment than Mercury. But when comparing it to its historical volatility, PJ Metal Co is 2.37 times less risky than Mercury. It trades about 0.44 of its potential returns per unit of risk. Mercury is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  303,500  in Mercury on October 10, 2024 and sell it today you would earn a total of  81,500  from holding Mercury or generate 26.85% return on investment over 90 days.

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

PJ Metal Co  vs.  Mercury

PJ Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PJ Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Mercury

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mercury are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mercury may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PJ Metal and Mercury

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

The idea behind PJ Metal Co and Mercury 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.