Correlation Between Mercuries Life and Standard Foods
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and Standard Foods 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 Mercuries Life and Standard Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercuries Life Insurance and Standard Foods Corp, you can compare the effects of market volatilities on Mercuries Life and Standard Foods 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 Mercuries Life with a short position of Standard Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and Standard Foods.
Diversification Opportunities for Mercuries Life and Standard Foods
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercuries and Standard is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Standard Foods Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Foods Corp and Mercuries Life 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 Mercuries Life Insurance are associated (or correlated) with Standard Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Foods Corp has no effect on the direction of Mercuries Life i.e., Mercuries Life and Standard Foods go up and down completely randomly.
Pair Corralation between Mercuries Life and Standard Foods
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to generate 1.97 times more return on investment than Standard Foods. However, Mercuries Life is 1.97 times more volatile than Standard Foods Corp. It trades about 0.04 of its potential returns per unit of risk. Standard Foods Corp is currently generating about -0.02 per unit of risk. If you would invest 526.00 in Mercuries Life Insurance on September 2, 2024 and sell it today you would earn a total of 134.00 from holding Mercuries Life Insurance or generate 25.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercuries Life Insurance vs. Standard Foods Corp
Performance |
| Timeline |
| Mercuries Life Insurance |
| Standard Foods Corp |
Mercuries Life and Standard Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Life and Standard Foods
The main advantage of trading using opposite Mercuries Life and Standard Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, Standard Foods 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 Standard Foods will offset losses from the drop in Standard Foods' long position.| Mercuries Life vs. CSBC Corp Taiwan | Mercuries Life vs. Hung Sheng Construction | Mercuries Life vs. Ton Yi Industrial | Mercuries Life vs. De Licacy Industrial |
| Standard Foods vs. Uni President Enterprises Corp | Standard Foods vs. TTET Union Corp | Standard Foods vs. President Chain Store | Standard Foods vs. Charoen Pokphand Enterprise |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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