Correlation Between Mercuries Life and Good Finance
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and Good Finance 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 Good Finance 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 Good Finance Securities, you can compare the effects of market volatilities on Mercuries Life and Good Finance 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 Good Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and Good Finance.
Diversification Opportunities for Mercuries Life and Good Finance
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercuries and Good is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Good Finance Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Good Finance Securities 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 Good Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Good Finance Securities has no effect on the direction of Mercuries Life i.e., Mercuries Life and Good Finance go up and down completely randomly.
Pair Corralation between Mercuries Life and Good Finance
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to under-perform the Good Finance. But the stock apears to be less risky and, when comparing its historical volatility, Mercuries Life Insurance is 1.47 times less risky than Good Finance. The stock trades about -0.3 of its potential returns per unit of risk. The Good Finance Securities is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,405 in Good Finance Securities on October 10, 2024 and sell it today you would lose (30.00) from holding Good Finance Securities or give up 1.25% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Mercuries Life Insurance vs. Good Finance Securities
Performance |
Timeline |
Mercuries Life Insurance |
Good Finance Securities |
Mercuries Life and Good Finance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mercuries Life and Good Finance
The main advantage of trading using opposite Mercuries Life and Good Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, Good Finance 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 Good Finance will offset losses from the drop in Good Finance's long position.Mercuries Life vs. CSBC Corp Taiwan | Mercuries Life vs. Hung Sheng Construction | Mercuries Life vs. Ton Yi Industrial | Mercuries Life vs. De Licacy Industrial |
Good Finance vs. Shanghai Commercial Savings | Good Finance vs. Kuo Yang Construction | Good Finance vs. New Asia Construction | Good Finance vs. International CSRC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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