Correlation Between Icon Offshore and Mercury Industries

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

By analyzing existing cross correlation between Icon Offshore Bhd and Mercury Industries Bhd, you can compare the effects of market volatilities on Icon Offshore and Mercury Industries 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 Icon Offshore with a short position of Mercury Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Icon Offshore and Mercury Industries.

Diversification Opportunities for Icon Offshore and Mercury Industries

-0.08

Correlation Coefficient

Icon Offshore  Mercury Industries

Good diversification

The 3 months correlation between Icon and Mercury is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Icon Offshore Bhd and Mercury Industries Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Industries Bhd and Icon Offshore 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 Icon Offshore Bhd are associated (or correlated) with Mercury Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Industries Bhd has no effect on the direction of Icon Offshore i.e., Icon Offshore and Mercury Industries go up and down completely randomly.

Pair Corralation between Icon Offshore and Mercury Industries

Assuming the 90 days trading horizon Icon Offshore Bhd is expected to under-perform the Mercury Industries. But the stock apears to be less risky and, when comparing its historical volatility, Icon Offshore Bhd is 1.48 times less risky than Mercury Industries. The stock trades about -0.05 of its potential returns per unit of risk. The Mercury Industries Bhd is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  93.00  in Mercury Industries Bhd on December 1, 2024 and sell it today you would earn a total of  0.00  from holding Mercury Industries Bhd or generate 0.0% return on investment over 90 days.

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

Icon Offshore Bhd  vs.  Mercury Industries Bhd

Icon Offshore Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Icon Offshore Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Icon Offshore is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Mercury Industries Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mercury Industries Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Mercury Industries is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Icon Offshore and Mercury Industries

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

The idea behind Icon Offshore Bhd and Mercury Industries Bhd 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.