Correlation Between Lian Hwa and Mercuries Data
Can any of the company-specific risk be diversified away by investing in both Lian Hwa and Mercuries Data 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 Lian Hwa and Mercuries Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lian Hwa Foods and Mercuries Data Systems, you can compare the effects of market volatilities on Lian Hwa and Mercuries Data 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 Lian Hwa with a short position of Mercuries Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lian Hwa and Mercuries Data.
Diversification Opportunities for Lian Hwa and Mercuries Data
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lian and Mercuries is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Lian Hwa Foods and Mercuries Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Data Systems and Lian Hwa 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 Lian Hwa Foods are associated (or correlated) with Mercuries Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Data Systems has no effect on the direction of Lian Hwa i.e., Lian Hwa and Mercuries Data go up and down completely randomly.
Pair Corralation between Lian Hwa and Mercuries Data
Assuming the 90 days trading horizon Lian Hwa Foods is expected to generate 0.58 times more return on investment than Mercuries Data. However, Lian Hwa Foods is 1.72 times less risky than Mercuries Data. It trades about 0.09 of its potential returns per unit of risk. Mercuries Data Systems is currently generating about 0.0 per unit of risk. If you would invest 8,880 in Lian Hwa Foods on September 2, 2024 and sell it today you would earn a total of 3,070 from holding Lian Hwa Foods or generate 34.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lian Hwa Foods vs. Mercuries Data Systems
Performance |
| Timeline |
| Lian Hwa Foods |
| Mercuries Data Systems |
Lian Hwa and Mercuries Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lian Hwa and Mercuries Data
The main advantage of trading using opposite Lian Hwa and Mercuries Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lian Hwa position performs unexpectedly, Mercuries Data 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 Mercuries Data will offset losses from the drop in Mercuries Data's long position.| Lian Hwa vs. Lien Hwa Industrial | Lian Hwa vs. Charoen Pokphand Enterprise | Lian Hwa vs. Great Wall Enterprise | Lian Hwa vs. Uni President Enterprises Corp |
| Mercuries Data vs. Ichia Technologies | Mercuries Data vs. Gigastorage Corp | Mercuries Data vs. Ability Enterprise Co | Mercuries Data vs. AVerMedia Technologies |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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