Correlation Between Xp and Mercurity Fintech

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

By analyzing existing cross correlation between Xp Inc and Mercurity Fintech Holding, you can compare the effects of market volatilities on Xp and Mercurity Fintech 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 Xp with a short position of Mercurity Fintech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Mercurity Fintech.

Diversification Opportunities for Xp and Mercurity Fintech

-0.92

Correlation Coefficient

Xp  Mercurity Fintech

Pay attention - limited upside

The 3 months correlation between Xp and Mercurity is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Mercurity Fintech Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercurity Fintech Holding and Xp 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 Xp Inc are associated (or correlated) with Mercurity Fintech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercurity Fintech Holding has no effect on the direction of Xp i.e., Xp and Mercurity Fintech go up and down completely randomly.

Pair Corralation between Xp and Mercurity Fintech

Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Mercurity Fintech. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 3.27 times less risky than Mercurity Fintech. The stock trades about -0.37 of its potential returns per unit of risk. The Mercurity Fintech Holding is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  499.00  in Mercurity Fintech Holding on September 23, 2024 and sell it today you would earn a total of  61.00  from holding Mercurity Fintech Holding or generate 12.22% return on investment over 90 days.

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

Xp Inc  vs.  Mercurity Fintech Holding

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent 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.

Mercurity Fintech Holding

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mercurity Fintech Holding are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating technical and fundamental indicators, Mercurity Fintech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xp and Mercurity Fintech

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

The idea behind Xp Inc and Mercurity Fintech Holding 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.