Correlation Between Mercuries Life and Cathay Financial
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and Cathay Financial 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 Cathay Financial 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 Cathay Financial Holding, you can compare the effects of market volatilities on Mercuries Life and Cathay Financial 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 Cathay Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and Cathay Financial.
Diversification Opportunities for Mercuries Life and Cathay Financial
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mercuries and Cathay is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Cathay Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathay Financial Holding 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 Cathay Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathay Financial Holding has no effect on the direction of Mercuries Life i.e., Mercuries Life and Cathay Financial go up and down completely randomly.
Pair Corralation between Mercuries Life and Cathay Financial
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to generate 5.36 times more return on investment than Cathay Financial. However, Mercuries Life is 5.36 times more volatile than Cathay Financial Holding. It trades about 0.02 of its potential returns per unit of risk. Cathay Financial Holding is currently generating about 0.05 per unit of risk. If you would invest 604.00 in Mercuries Life Insurance on August 27, 2024 and sell it today you would earn a total of 64.00 from holding Mercuries Life Insurance or generate 10.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercuries Life Insurance vs. Cathay Financial Holding
Performance |
| Timeline |
| Mercuries Life Insurance |
| Cathay Financial Holding |
Mercuries Life and Cathay Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Life and Cathay Financial
The main advantage of trading using opposite Mercuries Life and Cathay Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, Cathay Financial 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 Cathay Financial will offset losses from the drop in Cathay Financial'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 |
| Cathay Financial vs. United Radiant Technology | Cathay Financial vs. Tainet Communication System | Cathay Financial vs. China Airlines | Cathay Financial vs. WinMate Communication INC |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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