Correlation Between Holy Stone and Mercuries Data

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

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

Diversification Opportunities for Holy Stone and Mercuries Data

0.13

Correlation Coefficient

Holy Stone  Mercuries Data

Average diversification

The 3 months correlation between Holy and Mercuries is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Holy Stone Enterprise 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 Holy Stone 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 Holy Stone Enterprise 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 Holy Stone i.e., Holy Stone and Mercuries Data go up and down completely randomly.

Pair Corralation between Holy Stone and Mercuries Data

Assuming the 90 days trading horizon Holy Stone Enterprise is expected to generate 0.41 times more return on investment than Mercuries Data. However, Holy Stone Enterprise is 2.43 times less risky than Mercuries Data. It trades about 0.15 of its potential returns per unit of risk. Mercuries Data Systems is currently generating about 0.03 per unit of risk. If you would invest  8,610  in Holy Stone Enterprise on December 22, 2024 and sell it today you would earn a total of  680.00  from holding Holy Stone Enterprise or generate 7.9% return on investment over 90 days.

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

Holy Stone Enterprise  vs.  Mercuries Data Systems

Holy Stone Enterprise

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Holy Stone Enterprise are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Holy Stone may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mercuries Data Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mercuries Data Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Holy Stone and Mercuries Data

The main advantage of trading using opposite Holy Stone and Mercuries Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holy Stone 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 Holy Stone Enterprise 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.