Correlation Between Mercator Medical and CI Games

Can any of the company-specific risk be diversified away by investing in both Mercator Medical and CI Games 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 Mercator Medical and CI Games into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Mercator Medical and CI Games

0.78

Correlation Coefficient

Mercator Medical  CI Games

Poor diversification

The 3 months correlation between Mercator and CIG is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Mercator Medical SA and CI Games SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CI Games SA and Mercator Medical 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 Mercator Medical SA are associated (or correlated) with CI Games. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CI Games SA has no effect on the direction of Mercator Medical i.e., Mercator Medical and CI Games go up and down completely randomly.

Pair Corralation between Mercator Medical and CI Games

Assuming the 90 days trading horizon Mercator Medical SA is expected to under-perform the CI Games. In addition to that, Mercator Medical is 1.59 times more volatile than CI Games SA. It trades about -0.06 of its total potential returns per unit of risk. CI Games SA is currently generating about -0.08 per unit of volatility. If you would invest  159.00  in CI Games SA on September 5, 2024 and sell it today you would lose (16.00) from holding CI Games SA or give up 10.06% of portfolio value over 90 days.

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

Mercator Medical SA  vs.  CI Games SA

Mercator Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mercator Medical SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

CI Games SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CI Games SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Mercator Medical and CI Games

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

The idea behind Mercator Medical SA and CI Games 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.