Correlation Between Mercuries Life and Good Finance

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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 Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Mercuries Life Insurance  vs.  Good Finance Securities

 Performance 
       Timeline  
Mercuries Life Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Good Finance Securities 

Risk-Adjusted Performance

0 of 100

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

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.
The idea behind Mercuries Life Insurance and Good Finance Securities 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 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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