Correlation Between First Hotel and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both First Hotel 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 First Hotel and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Hotel Co and Mercuries Life Insurance, you can compare the effects of market volatilities on First Hotel 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 First Hotel with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Hotel and Mercuries Life.
Diversification Opportunities for First Hotel and Mercuries Life
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between First and Mercuries is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding First Hotel Co 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 First Hotel 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 First Hotel Co 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 First Hotel i.e., First Hotel and Mercuries Life go up and down completely randomly.
Pair Corralation between First Hotel and Mercuries Life
Assuming the 90 days trading horizon First Hotel is expected to generate 2.84 times less return on investment than Mercuries Life. But when comparing it to its historical volatility, First Hotel Co is 1.24 times less risky than Mercuries Life. It trades about 0.02 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 542.00 in Mercuries Life Insurance on August 26, 2024 and sell it today you would earn a total of 126.00 from holding Mercuries Life Insurance or generate 23.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Hotel Co vs. Mercuries Life Insurance
Performance |
| Timeline |
| First Hotel |
| Mercuries Life Insurance |
First Hotel and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Hotel and Mercuries Life
The main advantage of trading using opposite First Hotel and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Hotel 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.| First Hotel vs. Taiwan Semiconductor Manufacturing | First Hotel vs. Hon Hai Precision | First Hotel vs. MediaTek | First Hotel vs. Chunghwa Telecom Co |
| Mercuries Life vs. CSBC Corp Taiwan | Mercuries Life vs. Hung Sheng Construction | Mercuries Life vs. Ton Yi Industrial | Mercuries Life vs. De Licacy Industrial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |