Correlation Between Mercury Industries and Datasonic Group

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

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

Diversification Opportunities for Mercury Industries and Datasonic Group

0.09

Correlation Coefficient

Mercury Industries  Datasonic Group

Significant diversification

The 3 months correlation between Mercury and Datasonic is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and Datasonic Group Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datasonic Group Bhd and Mercury Industries 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 Mercury Industries Bhd are associated (or correlated) with Datasonic Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datasonic Group Bhd has no effect on the direction of Mercury Industries i.e., Mercury Industries and Datasonic Group go up and down completely randomly.

Pair Corralation between Mercury Industries and Datasonic Group

Assuming the 90 days trading horizon Mercury Industries Bhd is expected to generate 1.3 times more return on investment than Datasonic Group. However, Mercury Industries is 1.3 times more volatile than Datasonic Group Bhd. It trades about -0.01 of its potential returns per unit of risk. Datasonic Group Bhd is currently generating about -0.11 per unit of risk. If you would invest  97.00  in Mercury Industries Bhd on September 3, 2024 and sell it today you would lose (3.00) from holding Mercury Industries Bhd or give up 3.09% of portfolio value over 90 days.

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

Mercury Industries Bhd  vs.  Datasonic Group Bhd

Mercury Industries Bhd

Risk-Adjusted Performance

0 of 100

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.

Datasonic Group Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datasonic Group Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Mercury Industries and Datasonic Group

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

The idea behind Mercury Industries Bhd and Datasonic Group 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 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.