Correlation Between Mercuries Life and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and Tehmag 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 Tehmag 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 Tehmag Foods, you can compare the effects of market volatilities on Mercuries Life and Tehmag 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 Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and Tehmag Foods.
Diversification Opportunities for Mercuries Life and Tehmag Foods
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercuries and Tehmag is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods 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 Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of Mercuries Life i.e., Mercuries Life and Tehmag Foods go up and down completely randomly.
Pair Corralation between Mercuries Life and Tehmag Foods
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to under-perform the Tehmag Foods. In addition to that, Mercuries Life is 3.4 times more volatile than Tehmag Foods. It trades about -0.21 of its total potential returns per unit of risk. Tehmag Foods is currently generating about -0.22 per unit of volatility. If you would invest 31,550 in Tehmag Foods on August 29, 2024 and sell it today you would lose (1,100) from holding Tehmag Foods or give up 3.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.62% |
| Values | Daily Returns |
Mercuries Life Insurance vs. Tehmag Foods
Performance |
| Timeline |
| Mercuries Life Insurance |
| Tehmag Foods |
Mercuries Life and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Life and Tehmag Foods
The main advantage of trading using opposite Mercuries Life and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, Tehmag 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 Tehmag Foods will offset losses from the drop in Tehmag 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 |
| Tehmag Foods vs. AVerMedia Technologies | Tehmag Foods vs. U Media Communications | Tehmag Foods vs. Mercuries Life Insurance | Tehmag Foods vs. MediaTek |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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