Correlation Between Nable Communications and Mercury
Can any of the company-specific risk be diversified away by investing in both Nable Communications and Mercury 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 Nable Communications and Mercury into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nable Communications and Mercury, you can compare the effects of market volatilities on Nable Communications and Mercury 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 Nable Communications with a short position of Mercury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nable Communications and Mercury.
Diversification Opportunities for Nable Communications and Mercury
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nable and Mercury is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nable Communications and Mercury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury and Nable Communications 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 Nable Communications are associated (or correlated) with Mercury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury has no effect on the direction of Nable Communications i.e., Nable Communications and Mercury go up and down completely randomly.
Pair Corralation between Nable Communications and Mercury
Assuming the 90 days trading horizon Nable Communications is expected to generate 4.68 times less return on investment than Mercury. But when comparing it to its historical volatility, Nable Communications is 3.36 times less risky than Mercury. It trades about 0.07 of its potential returns per unit of risk. Mercury is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 361,000 in Mercury on September 2, 2024 and sell it today you would earn a total of 28,000 from holding Mercury or generate 7.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nable Communications vs. Mercury
Performance |
| Timeline |
| Nable Communications |
| Mercury |
Nable Communications and Mercury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nable Communications and Mercury
The main advantage of trading using opposite Nable Communications and Mercury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nable Communications position performs unexpectedly, Mercury 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 will offset losses from the drop in Mercury's long position.| Nable Communications vs. Ilji Technology Co | Nable Communications vs. NewFlex Technology Co | Nable Communications vs. Puloon Technology | Nable Communications vs. Koh Young Technology |
| Mercury vs. Iljin Display | Mercury vs. Nable Communications | Mercury vs. Korea Information Communications | Mercury vs. Jeju Beer Co |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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