Correlation Between Hannstar Display and Mercuries Life

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

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

Diversification Opportunities for Hannstar Display and Mercuries Life

0.86

Correlation Coefficient

Hannstar Display  Mercuries Life

Very poor diversification

The 3 months correlation between Hannstar and Mercuries is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Hannstar Display Corp and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance and Hannstar Display 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 Hannstar Display Corp are associated (or correlated) with Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Hannstar Display i.e., Hannstar Display and Mercuries Life go up and down completely randomly.

Pair Corralation between Hannstar Display and Mercuries Life

Assuming the 90 days trading horizon Hannstar Display Corp is expected to under-perform the Mercuries Life. In addition to that, Hannstar Display is 1.62 times more volatile than Mercuries Life Insurance. It trades about -0.2 of its total potential returns per unit of risk. Mercuries Life Insurance is currently generating about -0.27 per unit of volatility. If you would invest  699.00  in Mercuries Life Insurance on October 6, 2024 and sell it today you would lose (76.00) from holding Mercuries Life Insurance or give up 10.87% of portfolio value over 90 days.

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

Hannstar Display Corp  vs.  Mercuries Life Insurance

Hannstar Display Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hannstar Display Corp 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.

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.

Pair Trading with Hannstar Display and Mercuries Life

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

The idea behind Hannstar Display Corp and Mercuries Life Insurance 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.