Correlation Between Mercuries Life and Johnson Health
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and Johnson Health 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 Johnson Health 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 Johnson Health Tech, you can compare the effects of market volatilities on Mercuries Life and Johnson Health 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 Johnson Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and Johnson Health.
Diversification Opportunities for Mercuries Life and Johnson Health
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mercuries and Johnson is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Johnson Health Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Health Tech 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 Johnson Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Health Tech has no effect on the direction of Mercuries Life i.e., Mercuries Life and Johnson Health go up and down completely randomly.
Pair Corralation between Mercuries Life and Johnson Health
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to generate 0.72 times more return on investment than Johnson Health. However, Mercuries Life Insurance is 1.38 times less risky than Johnson Health. It trades about 0.5 of its potential returns per unit of risk. Johnson Health Tech is currently generating about -0.25 per unit of risk. If you would invest 652.00 in Mercuries Life Insurance on November 28, 2024 and sell it today you would earn a total of 80.00 from holding Mercuries Life Insurance or generate 12.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercuries Life Insurance vs. Johnson Health Tech
Performance |
| Timeline |
| Mercuries Life Insurance |
| Johnson Health Tech |
Mercuries Life and Johnson Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Life and Johnson Health
The main advantage of trading using opposite Mercuries Life and Johnson Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, Johnson Health 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 Johnson Health will offset losses from the drop in Johnson Health's 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 |
| Johnson Health vs. Taiwan Fertilizer Co | Johnson Health vs. Giant Manufacturing Co | Johnson Health vs. Grape King Bio | Johnson Health vs. Rexon Industrial Corp |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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