Correlation Between Mercuries Life and Song Ho
Can any of the company-specific risk be diversified away by investing in both Mercuries Life and Song Ho 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 Song Ho 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 Song Ho Industrial, you can compare the effects of market volatilities on Mercuries Life and Song Ho 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 Song Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Life and Song Ho.
Diversification Opportunities for Mercuries Life and Song Ho
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercuries and Song is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Life Insurance and Song Ho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Ho Industrial 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 Song Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Ho Industrial has no effect on the direction of Mercuries Life i.e., Mercuries Life and Song Ho go up and down completely randomly.
Pair Corralation between Mercuries Life and Song Ho
Assuming the 90 days trading horizon Mercuries Life Insurance is expected to generate 2.6 times more return on investment than Song Ho. However, Mercuries Life is 2.6 times more volatile than Song Ho Industrial. It trades about 0.05 of its potential returns per unit of risk. Song Ho Industrial is currently generating about 0.0 per unit of risk. If you would invest 520.00 in Mercuries Life Insurance on November 30, 2024 and sell it today you would earn a total of 185.00 from holding Mercuries Life Insurance or generate 35.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.79% |
| Values | Daily Returns |
Mercuries Life Insurance vs. Song Ho Industrial
Performance |
| Timeline |
| Mercuries Life Insurance |
| Song Ho Industrial |
Mercuries Life and Song Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Life and Song Ho
The main advantage of trading using opposite Mercuries Life and Song Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Life position performs unexpectedly, Song Ho 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 Song Ho will offset losses from the drop in Song Ho'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 |
| Song Ho vs. LandMark Optoelectronics | Song Ho vs. Elan Microelectronics Corp | Song Ho vs. Orient Semiconductor Electronics | Song Ho vs. WIN Semiconductors |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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