Correlation Between First Insurance and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both First Insurance 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 Insurance 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 Insurance Co and Mercuries Life Insurance, you can compare the effects of market volatilities on First Insurance 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 Insurance with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Insurance and Mercuries Life.
Diversification Opportunities for First Insurance and Mercuries Life
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between First and Mercuries is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding First Insurance 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 Insurance 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 Insurance 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 Insurance i.e., First Insurance and Mercuries Life go up and down completely randomly.
Pair Corralation between First Insurance and Mercuries Life
Assuming the 90 days trading horizon First Insurance is expected to generate 12.25 times less return on investment than Mercuries Life. But when comparing it to its historical volatility, First Insurance Co is 1.49 times less risky than Mercuries Life. It trades about 0.01 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 581.00 in Mercuries Life Insurance on September 3, 2024 and sell it today you would earn a total of 79.00 from holding Mercuries Life Insurance or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Insurance Co vs. Mercuries Life Insurance
Performance |
| Timeline |
| First Insurance |
| Mercuries Life Insurance |
First Insurance and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Insurance and Mercuries Life
The main advantage of trading using opposite First Insurance and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Insurance 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 Insurance vs. Central Reinsurance Corp | First Insurance vs. Huaku Development Co | First Insurance vs. Chailease Holding Co | First Insurance vs. CTBC Financial Holding |
| Mercuries Life vs. Central Reinsurance Corp | Mercuries Life vs. Huaku Development Co | Mercuries Life vs. Chailease Holding Co | Mercuries Life vs. CTBC Financial Holding |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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