Correlation Between Applied Digital and Mercurity Fintech

Can any of the company-specific risk be diversified away by investing in both Applied Digital and Mercurity Fintech 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 Applied Digital and Mercurity Fintech into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Digital and Mercurity Fintech Holding, you can compare the effects of market volatilities on Applied Digital and Mercurity Fintech 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 Applied Digital with a short position of Mercurity Fintech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Mercurity Fintech.

Diversification Opportunities for Applied Digital and Mercurity Fintech

0.49

Correlation Coefficient

Applied Digital  Mercurity Fintech

Very weak diversification

The 3 months correlation between Applied and Mercurity is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Mercurity Fintech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercurity Fintech Holding and Applied Digital 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 Applied Digital are associated (or correlated) with Mercurity Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercurity Fintech Holding has no effect on the direction of Applied Digital i.e., Applied Digital and Mercurity Fintech go up and down completely randomly.

Pair Corralation between Applied Digital and Mercurity Fintech

Given the investment horizon of 90 days Applied Digital is expected to generate 1.69 times less return on investment than Mercurity Fintech. In addition to that, Applied Digital is 1.22 times more volatile than Mercurity Fintech Holding. It trades about 0.02 of its total potential returns per unit of risk. Mercurity Fintech Holding is currently generating about 0.05 per unit of volatility. If you would invest  581.00  in Mercurity Fintech Holding on December 21, 2024 and sell it today you would earn a total of  36.00  from holding Mercurity Fintech Holding or generate 6.2% return on investment over 90 days.

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

Applied Digital  vs.  Mercurity Fintech Holding

Applied Digital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Applied Digital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Applied Digital may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mercurity Fintech Holding

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mercurity Fintech Holding are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly conflicting technical and fundamental indicators, Mercurity Fintech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Applied Digital and Mercurity Fintech

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

The idea behind Applied Digital and Mercurity Fintech Holding 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.