Correlation Between Mercuries Life and Hi Lai
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and Hi Lai 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 Hi Lai 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 Hi Lai Foods Co, you can compare the effects of market volatilities on Mercuries Life and Hi Lai 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 Hi Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and Hi Lai.
Diversification Opportunities for Mercuries Life and Hi Lai
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mercuries and 1268 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Hi Lai Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hi Lai 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 Hi Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hi Lai Foods has no effect on the direction of Mercuries Life i.e., Mercuries Life and Hi Lai go up and down completely randomly.
Pair Corralation between Mercuries Life and Hi Lai
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to under-perform the Hi Lai. In addition to that, Mercuries Life is 1.68 times more volatile than Hi Lai Foods Co. It trades about -0.03 of its total potential returns per unit of risk. Hi Lai Foods Co is currently generating about 0.05 per unit of volatility. If you would invest 14,529 in Hi Lai Foods Co on November 3, 2024 and sell it today you would earn a total of 721.00 from holding Hi Lai Foods Co or generate 4.96% 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. Hi Lai Foods Co
Performance |
| Timeline |
| Mercuries Life Insurance |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Hi Lai Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Mercuries Life and Hi Lai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Life and Hi Lai
The main advantage of trading using opposite Mercuries Life and Hi Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, Hi Lai 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 Hi Lai will offset losses from the drop in Hi Lai's long position.The idea behind Mercuries Life Insurance and Hi Lai Foods Co 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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