Correlation Between Mercury General and B3 SA

Can any of the company-specific risk be diversified away by investing in both Mercury General and B3 SA 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 General and B3 SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mercury General and B3 SA , you can compare the effects of market volatilities on Mercury General and B3 SA 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 General with a short position of B3 SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury General and B3 SA.

Diversification Opportunities for Mercury General and B3 SA

-0.77

Correlation Coefficient

Mercury General  B3 SA

Pay attention - limited upside

The 3 months correlation between Mercury and BOLSY is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mercury General and B3 SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on B3 SA and Mercury General 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 General are associated (or correlated) with B3 SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of B3 SA has no effect on the direction of Mercury General i.e., Mercury General and B3 SA go up and down completely randomly.

Pair Corralation between Mercury General and B3 SA

Considering the 90-day investment horizon Mercury General is expected to generate 0.74 times more return on investment than B3 SA. However, Mercury General is 1.36 times less risky than B3 SA. It trades about 0.08 of its potential returns per unit of risk. B3 SA is currently generating about -0.08 per unit of risk. If you would invest  6,295  in Mercury General on September 27, 2024 and sell it today you would earn a total of  589.00  from holding Mercury General or generate 9.36% return on investment over 90 days.

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

Mercury General  vs.  B3 SA

Mercury General

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mercury General are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental indicators, Mercury General may actually be approaching a critical reversion point that can send shares even higher in January 2025.

B3 SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days B3 SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mercury General and B3 SA

The main advantage of trading using opposite Mercury General and B3 SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury General position performs unexpectedly, B3 SA 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 B3 SA will offset losses from the drop in B3 SA's long position.

The idea behind Mercury General and B3 SA 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.