Correlation Between Nova Wellness and Mercury Industries
Can any of the company-specific risk be diversified away by investing in both Nova Wellness and Mercury Industries 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 Nova Wellness and Mercury Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Wellness Group and Mercury Industries Bhd, you can compare the effects of market volatilities on Nova Wellness and Mercury Industries 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 Nova Wellness with a short position of Mercury Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Wellness and Mercury Industries.
Diversification Opportunities for Nova Wellness and Mercury Industries
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nova and Mercury is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nova Wellness Group and Mercury Industries Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Industries Bhd and Nova Wellness 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 Nova Wellness Group are associated (or correlated) with Mercury Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Industries Bhd has no effect on the direction of Nova Wellness i.e., Nova Wellness and Mercury Industries go up and down completely randomly.
Pair Corralation between Nova Wellness and Mercury Industries
Assuming the 90 days trading horizon Nova Wellness Group is expected to generate 0.89 times more return on investment than Mercury Industries. However, Nova Wellness Group is 1.12 times less risky than Mercury Industries. It trades about -0.04 of its potential returns per unit of risk. Mercury Industries Bhd is currently generating about -0.17 per unit of risk. If you would invest 45.00 in Nova Wellness Group on August 28, 2024 and sell it today you would lose (1.00) from holding Nova Wellness Group or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nova Wellness Group vs. Mercury Industries Bhd
Performance |
| Timeline |
| Nova Wellness Group |
| Mercury Industries Bhd |
Nova Wellness and Mercury Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Wellness and Mercury Industries
The main advantage of trading using opposite Nova Wellness and Mercury Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Wellness position performs unexpectedly, Mercury Industries 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 Mercury Industries will offset losses from the drop in Mercury Industries' long position.| Nova Wellness vs. SFP Tech Holdings | Nova Wellness vs. Apollo Food Holdings | Nova Wellness vs. Icon Offshore Bhd | Nova Wellness vs. Aurelius Technologies Bhd |
| Mercury Industries vs. Senheng New Retail | Mercury Industries vs. Alliance Financial Group | Mercury Industries vs. Kluang Rubber | Mercury Industries vs. Apex Healthcare Bhd |
Check out your portfolio center.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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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