Correlation Between Mercuries Life and WPG Holdings
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and WPG Holdings 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 WPG Holdings 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 WPG Holdings, you can compare the effects of market volatilities on Mercuries Life and WPG Holdings 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 WPG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and WPG Holdings.
Diversification Opportunities for Mercuries Life and WPG Holdings
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Mercuries and WPG is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and WPG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WPG Holdings 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 WPG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WPG Holdings has no effect on the direction of Mercuries Life i.e., Mercuries Life and WPG Holdings go up and down completely randomly.
Pair Corralation between Mercuries Life and WPG Holdings
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to generate 4.95 times more return on investment than WPG Holdings. However, Mercuries Life is 4.95 times more volatile than WPG Holdings. It trades about 0.03 of its potential returns per unit of risk. WPG Holdings is currently generating about 0.1 per unit of risk. If you would invest 576.00 in Mercuries Life Insurance on September 4, 2024 and sell it today you would earn a total of 85.00 from holding Mercuries Life Insurance or generate 14.76% 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. WPG Holdings
Performance |
| Timeline |
| Mercuries Life Insurance |
| WPG Holdings |
Mercuries Life and WPG Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Life and WPG Holdings
The main advantage of trading using opposite Mercuries Life and WPG Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, WPG Holdings 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 WPG Holdings will offset losses from the drop in WPG Holdings' 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 |
| WPG Holdings vs. Tehmag Foods | WPG Holdings vs. Arima Communications Corp | WPG Holdings vs. WinMate Communication INC | WPG Holdings vs. Mercuries Life Insurance |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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