Correlation Between Mercuries Data and AVer Information

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

Diversification Opportunities for Mercuries Data and AVer Information

0.16

Correlation Coefficient

Mercuries Data  AVer Information

Average diversification

The 3 months correlation between Mercuries and AVer is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Data Systems and AVer Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVer Information 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 AVer Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVer Information has no effect on the direction of Mercuries Data i.e., Mercuries Data and AVer Information go up and down completely randomly.

Pair Corralation between Mercuries Data and AVer Information

Assuming the 90 days trading horizon Mercuries Data Systems is expected to generate 1.36 times more return on investment than AVer Information. However, Mercuries Data is 1.36 times more volatile than AVer Information. It trades about 0.07 of its potential returns per unit of risk. AVer Information is currently generating about 0.01 per unit of risk. If you would invest  1,190  in Mercuries Data Systems on October 5, 2024 and sell it today you would earn a total of  1,635  from holding Mercuries Data Systems or generate 137.39% return on investment over 90 days.

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

Mercuries Data Systems  vs.  AVer Information

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.

AVer Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AVer Information has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Mercuries Data and AVer Information

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

The idea behind Mercuries Data Systems and AVer Information 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.