Correlation Between Mercuries Data and Adata Technology

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

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

Diversification Opportunities for Mercuries Data and Adata Technology

-0.18

Correlation Coefficient

Mercuries Data  Adata Technology

Good diversification

The 3 months correlation between Mercuries and Adata is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Data Systems and Adata Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adata Technology and Mercuries Data 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 Mercuries Data Systems are associated (or correlated) with Adata Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adata Technology has no effect on the direction of Mercuries Data i.e., Mercuries Data and Adata Technology go up and down completely randomly.

Pair Corralation between Mercuries Data and Adata Technology

Assuming the 90 days trading horizon Mercuries Data Systems is expected to generate 2.13 times more return on investment than Adata Technology. However, Mercuries Data is 2.13 times more volatile than Adata Technology Co. It trades about 0.14 of its potential returns per unit of risk. Adata Technology Co is currently generating about -0.37 per unit of risk. If you would invest  2,590  in Mercuries Data Systems on October 5, 2024 and sell it today you would earn a total of  235.00  from holding Mercuries Data Systems or generate 9.07% return on investment over 90 days.

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

Mercuries Data Systems  vs.  Adata Technology Co

Mercuries Data Systems

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mercuries Data Systems are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Mercuries Data may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Adata Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Adata Technology Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Mercuries Data and Adata Technology

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

The idea behind Mercuries Data Systems and Adata Technology 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.