Correlation Between Mercuries Associates and Far Eastern
Can any of the company-specific risk be diversified away by investing in both Mercuries Associates and Far Eastern 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 Associates and Far Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercuries Associates Holding and Far Eastern Department, you can compare the effects of market volatilities on Mercuries Associates and Far Eastern 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 Associates with a short position of Far Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Associates and Far Eastern.
Diversification Opportunities for Mercuries Associates and Far Eastern
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Mercuries and Far is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Associates Holding and Far Eastern Department in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Far Eastern Department and Mercuries Associates 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 Associates Holding are associated (or correlated) with Far Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Far Eastern Department has no effect on the direction of Mercuries Associates i.e., Mercuries Associates and Far Eastern go up and down completely randomly.
Pair Corralation between Mercuries Associates and Far Eastern
Assuming the 90 days trading horizon Mercuries Associates Holding is expected to under-perform the Far Eastern. In addition to that, Mercuries Associates is 2.47 times more volatile than Far Eastern Department. It trades about -0.05 of its total potential returns per unit of risk. Far Eastern Department is currently generating about -0.13 per unit of volatility. If you would invest 2,605 in Far Eastern Department on August 28, 2024 and sell it today you would lose (55.00) from holding Far Eastern Department or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Mercuries Associates Holding vs. Far Eastern Department
Performance |
| Timeline |
| Mercuries Associates |
| Far Eastern Department |
Mercuries Associates and Far Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Associates and Far Eastern
The main advantage of trading using opposite Mercuries Associates and Far Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Associates position performs unexpectedly, Far Eastern 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 Far Eastern will offset losses from the drop in Far Eastern's long position.| Mercuries Associates vs. Far Eastern Department | Mercuries Associates vs. Taiwan Tea Corp | Mercuries Associates vs. Test Rite International | Mercuries Associates vs. Ruentex Industries |
| Far Eastern vs. Yulon Motor Co | Far Eastern vs. Chang Hwa Commercial | Far Eastern vs. Sinopac Financial Holdings | Far Eastern vs. Taiwan Glass Ind |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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