Correlation Between Magic Empire and Mercurity Fintech

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

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

Diversification Opportunities for Magic Empire and Mercurity Fintech

-0.2

Correlation Coefficient

Magic Empire  Mercurity Fintech

Good diversification

The 3 months correlation between Magic and Mercurity is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Magic Empire Global 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 Magic Empire 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 Magic Empire Global 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 Magic Empire i.e., Magic Empire and Mercurity Fintech go up and down completely randomly.

Pair Corralation between Magic Empire and Mercurity Fintech

Given the investment horizon of 90 days Magic Empire Global is expected to under-perform the Mercurity Fintech. But the stock apears to be less risky and, when comparing its historical volatility, Magic Empire Global is 3.16 times less risky than Mercurity Fintech. The stock trades about -0.2 of its potential returns per unit of risk. The Mercurity Fintech Holding is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  590.00  in Mercurity Fintech Holding on September 25, 2024 and sell it today you would lose (9.00) from holding Mercurity Fintech Holding or give up 1.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Magic Empire Global  vs.  Mercurity Fintech Holding

Magic Empire Global

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Magic Empire Global are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent technical and fundamental indicators, Magic Empire disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mercurity Fintech Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mercurity Fintech Holding are ranked lower than 16 (%) 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 Magic Empire and Mercurity Fintech

The main advantage of trading using opposite Magic Empire and Mercurity Fintech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magic Empire 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 Magic Empire Global 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.