Correlation Between Mercator Medical and X Trade

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

Diversification Opportunities for Mercator Medical and X Trade

-0.64

Correlation Coefficient

Mercator Medical  X Trade

Excellent diversification

The 3 months correlation between Mercator and XTB is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Mercator Medical SA and X Trade Brokers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Trade Brokers 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 X Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Trade Brokers has no effect on the direction of Mercator Medical i.e., Mercator Medical and X Trade go up and down completely randomly.

Pair Corralation between Mercator Medical and X Trade

Assuming the 90 days trading horizon Mercator Medical SA is expected to under-perform the X Trade. In addition to that, Mercator Medical is 1.66 times more volatile than X Trade Brokers. It trades about -0.06 of its total potential returns per unit of risk. X Trade Brokers is currently generating about 0.12 per unit of volatility. If you would invest  6,200  in X Trade Brokers on September 5, 2024 and sell it today you would earn a total of  836.00  from holding X Trade Brokers or generate 13.48% return on investment over 90 days.

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

Mercator Medical SA  vs.  X Trade Brokers

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.

X Trade Brokers

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in X Trade Brokers are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, X Trade reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mercator Medical and X Trade

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

The idea behind Mercator Medical SA and X Trade Brokers 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.