Correlation Between Mercator Medical and Play2Chill

Can any of the company-specific risk be diversified away by investing in both Mercator Medical and Play2Chill 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 Play2Chill 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 Play2Chill SA, you can compare the effects of market volatilities on Mercator Medical and Play2Chill 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 Play2Chill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercator Medical and Play2Chill.

Diversification Opportunities for Mercator Medical and Play2Chill

0.72

Correlation Coefficient

Mercator Medical  Play2Chill

Poor diversification

The 3 months correlation between Mercator and Play2Chill is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mercator Medical SA and Play2Chill SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Play2Chill 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 Play2Chill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Play2Chill SA has no effect on the direction of Mercator Medical i.e., Mercator Medical and Play2Chill go up and down completely randomly.

Pair Corralation between Mercator Medical and Play2Chill

Assuming the 90 days trading horizon Mercator Medical SA is expected to generate 0.71 times more return on investment than Play2Chill. However, Mercator Medical SA is 1.4 times less risky than Play2Chill. It trades about 0.0 of its potential returns per unit of risk. Play2Chill SA is currently generating about -0.12 per unit of risk. If you would invest  4,780  in Mercator Medical SA on December 30, 2024 and sell it today you would lose (80.00) from holding Mercator Medical SA or give up 1.67% of portfolio value over 90 days.

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

Mercator Medical SA  vs.  Play2Chill SA

Mercator Medical

Risk-Adjusted Performance

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 relatively invariable basic indicators, Mercator Medical is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Play2Chill SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Play2Chill SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Mercator Medical and Play2Chill

The main advantage of trading using opposite Mercator Medical and Play2Chill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercator Medical position performs unexpectedly, Play2Chill 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 Play2Chill will offset losses from the drop in Play2Chill's long position.

The idea behind Mercator Medical SA and Play2Chill 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.