Correlation Between New Tech and Mercator Medical

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

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

Diversification Opportunities for New Tech and Mercator Medical

0.6

Correlation Coefficient

New Tech  Mercator Medical

Poor diversification

The 3 months correlation between New and Mercator is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding New Tech Venture and Mercator Medical SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercator Medical and New Tech 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 New Tech Venture are associated (or correlated) with Mercator Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercator Medical has no effect on the direction of New Tech i.e., New Tech and Mercator Medical go up and down completely randomly.

Pair Corralation between New Tech and Mercator Medical

Assuming the 90 days trading horizon New Tech Venture is expected to under-perform the Mercator Medical. In addition to that, New Tech is 1.14 times more volatile than Mercator Medical SA. It trades about -0.15 of its total potential returns per unit of risk. Mercator Medical SA is currently generating about 0.0 per unit of volatility. If you would invest  5,400  in Mercator Medical SA on September 14, 2024 and sell it today you would lose (180.00) from holding Mercator Medical SA or give up 3.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	62.9%
Values	Daily Returns

New Tech Venture  vs.  Mercator Medical SA

New Tech Venture

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Tech Venture 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 January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 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.

Pair Trading with New Tech and Mercator Medical

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

The idea behind New Tech Venture and Mercator Medical 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.