Correlation Between Mercurity Fintech and Netcapital

Can any of the company-specific risk be diversified away by investing in both Mercurity Fintech and Netcapital 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 Netcapital 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 Netcapital, you can compare the effects of market volatilities on Mercurity Fintech and Netcapital 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 Netcapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercurity Fintech and Netcapital.

Diversification Opportunities for Mercurity Fintech and Netcapital

0.41

Correlation Coefficient

Mercurity Fintech  Netcapital

Very weak diversification

The 3 months correlation between Mercurity and Netcapital is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Mercurity Fintech Holding and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital 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 Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Mercurity Fintech i.e., Mercurity Fintech and Netcapital go up and down completely randomly.

Pair Corralation between Mercurity Fintech and Netcapital

Considering the 90-day investment horizon Mercurity Fintech Holding is expected to generate 1.58 times more return on investment than Netcapital. However, Mercurity Fintech is 1.58 times more volatile than Netcapital. It trades about 0.04 of its potential returns per unit of risk. Netcapital is currently generating about -0.06 per unit of risk. If you would invest  581.00  in Mercurity Fintech Holding on December 22, 2024 and sell it today you would earn a total of  20.00  from holding Mercurity Fintech Holding or generate 3.44% return on investment over 90 days.

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

Mercurity Fintech Holding  vs.  Netcapital

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.

Netcapital

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mercurity Fintech and Netcapital

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

The idea behind Mercurity Fintech Holding and Netcapital 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..