Correlation Between Mercuries Life and Buima

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

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

Diversification Opportunities for Mercuries Life and Buima

0.56

Correlation Coefficient

Mercuries Life  Buima

Very weak diversification

The 3 months correlation between Mercuries and Buima is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Buima Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Buima Group and Mercuries Life 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 Life Insurance are associated (or correlated) with Buima. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Buima Group has no effect on the direction of Mercuries Life i.e., Mercuries Life and Buima go up and down completely randomly.

Pair Corralation between Mercuries Life and Buima

Assuming the 90 days trading horizon Mercuries Life Insurance is expected to generate 0.6 times more return on investment than Buima. However, Mercuries Life Insurance is 1.68 times less risky than Buima. It trades about 0.05 of its potential returns per unit of risk. Buima Group is currently generating about -0.1 per unit of risk. If you would invest  535.00  in Mercuries Life Insurance on October 9, 2024 and sell it today you would earn a total of  92.00  from holding Mercuries Life Insurance or generate 17.2% return on investment over 90 days.

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

Mercuries Life Insurance  vs.  Buima Group

Mercuries Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercuries Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak 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.

Buima Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Buima Group 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 Life and Buima

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

The idea behind Mercuries Life Insurance and Buima Group 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.