Correlation Between Fortune Information and Mercuries Data

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

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

Diversification Opportunities for Fortune Information and Mercuries Data

0.46

Correlation Coefficient

Fortune Information  Mercuries Data

Very weak diversification

The 3 months correlation between Fortune and Mercuries is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fortune Information Systems and Mercuries Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Data Systems and Fortune Information 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 Fortune Information Systems are associated (or correlated) with Mercuries Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Data Systems has no effect on the direction of Fortune Information i.e., Fortune Information and Mercuries Data go up and down completely randomly.

Pair Corralation between Fortune Information and Mercuries Data

Assuming the 90 days trading horizon Fortune Information Systems is expected to generate 1.38 times more return on investment than Mercuries Data. However, Fortune Information is 1.38 times more volatile than Mercuries Data Systems. It trades about 0.04 of its potential returns per unit of risk. Mercuries Data Systems is currently generating about 0.01 per unit of risk. If you would invest  2,390  in Fortune Information Systems on October 9, 2024 and sell it today you would earn a total of  130.00  from holding Fortune Information Systems or generate 5.44% return on investment over 90 days.

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

Fortune Information Systems  vs.  Mercuries Data Systems

Fortune Information

Risk-Adjusted Performance

3 of 100

Insignificant

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

Mercuries Data Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercuries Data Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Mercuries Data is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Fortune Information and Mercuries Data

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

The idea behind Fortune Information Systems and Mercuries Data Systems 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..