Correlation Between Mercuries Associates and President Chain
Can any of the company-specific risk be diversified away by investing in both Mercuries Associates and President Chain 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 President Chain 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 President Chain Store, you can compare the effects of market volatilities on Mercuries Associates and President Chain 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 President Chain. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercuries Associates and President Chain.
Diversification Opportunities for Mercuries Associates and President Chain
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mercuries and President is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mercuries Associates Holding and President Chain Store in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on President Chain Store 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 President Chain. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of President Chain Store has no effect on the direction of Mercuries Associates i.e., Mercuries Associates and President Chain go up and down completely randomly.
Pair Corralation between Mercuries Associates and President Chain
Assuming the 90 days trading horizon Mercuries Associates Holding is expected to generate 0.83 times more return on investment than President Chain. However, Mercuries Associates Holding is 1.2 times less risky than President Chain. It trades about -0.25 of its potential returns per unit of risk. President Chain Store is currently generating about -0.24 per unit of risk. If you would invest 1,730 in Mercuries Associates Holding on August 27, 2024 and sell it today you would lose (120.00) from holding Mercuries Associates Holding or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercuries Associates Holding vs. President Chain Store
Performance |
| Timeline |
| Mercuries Associates |
| President Chain Store |
Mercuries Associates and President Chain Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercuries Associates and President Chain
The main advantage of trading using opposite Mercuries Associates and President Chain positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercuries Associates position performs unexpectedly, President Chain 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 President Chain will offset losses from the drop in President Chain'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 |
| President Chain vs. Taiwan Cement Corp | President Chain vs. Ruentex Development Co | President Chain vs. Symtek Automation Asia | President Chain vs. CTCI 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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