Correlation Between China Steel and Mercuries Life

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both China Steel and Mercuries Life 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 China Steel and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Steel Chemical and Mercuries Life Insurance, you can compare the effects of market volatilities on China Steel and Mercuries Life 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 China Steel with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Steel and Mercuries Life.

Diversification Opportunities for China Steel and Mercuries Life

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between China and Mercuries is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding China Steel Chemical and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance and China Steel 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 China Steel Chemical are associated (or correlated) with Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of China Steel i.e., China Steel and Mercuries Life go up and down completely randomly.

Pair Corralation between China Steel and Mercuries Life

Assuming the 90 days trading horizon China Steel Chemical is expected to generate 0.73 times more return on investment than Mercuries Life. However, China Steel Chemical is 1.36 times less risky than Mercuries Life. It trades about -0.09 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about -0.22 per unit of risk. If you would invest  9,870  in China Steel Chemical on September 2, 2024 and sell it today you would lose (160.00) from holding China Steel Chemical or give up 1.62% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

China Steel Chemical  vs.  Mercuries Life Insurance

 Performance 
       Timeline  
China Steel Chemical 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days China Steel Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, China Steel is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.
Mercuries Life Insurance 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Mercuries Life Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

China Steel and Mercuries Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with China Steel and Mercuries Life

The main advantage of trading using opposite China Steel and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Steel position performs unexpectedly, Mercuries Life 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 Life will offset losses from the drop in Mercuries Life's long position.
The idea behind China Steel Chemical and Mercuries Life Insurance 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.
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

Other Complementary Tools

Positions Ratings
Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Portfolio Holdings
Check your current holdings and cash postion to detemine if your portfolio needs rebalancing
Content Syndication
Quickly integrate customizable finance content to your own investment portal