Correlation Between Mercurity Fintech and MKDWELL Tech

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

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

Diversification Opportunities for Mercurity Fintech and MKDWELL Tech

-0.64

Correlation Coefficient

Mercurity Fintech  MKDWELL Tech

Excellent diversification

The 3 months correlation between Mercurity and MKDWELL is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mercurity Fintech Holding and MKDWELL Tech Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MKDWELL Tech Ordinary and Mercurity Fintech 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 Mercurity Fintech Holding are associated (or correlated) with MKDWELL Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MKDWELL Tech Ordinary has no effect on the direction of Mercurity Fintech i.e., Mercurity Fintech and MKDWELL Tech go up and down completely randomly.

Pair Corralation between Mercurity Fintech and MKDWELL Tech

Considering the 90-day investment horizon Mercurity Fintech Holding is expected to under-perform the MKDWELL Tech. But the stock apears to be less risky and, when comparing its historical volatility, Mercurity Fintech Holding is 1.36 times less risky than MKDWELL Tech. The stock trades about -0.06 of its potential returns per unit of risk. The MKDWELL Tech Ordinary is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  86.00  in MKDWELL Tech Ordinary on September 27, 2024 and sell it today you would earn a total of  10.40  from holding MKDWELL Tech Ordinary or generate 12.09% return on investment over 90 days.

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

Mercurity Fintech Holding  vs.  MKDWELL Tech Ordinary

Mercurity Fintech Holding

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mercurity Fintech Holding are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Mercurity Fintech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

MKDWELL Tech Ordinary

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MKDWELL Tech Ordinary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's fundamental indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Mercurity Fintech and MKDWELL Tech

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

The idea behind Mercurity Fintech Holding and MKDWELL Tech Ordinary 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.

Check out your portfolio center.

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 Transaction History module to view history of all your transactions and understand their impact on performance.