Correlation Between Shangri La and Mercury Industries
Can any of the company-specific risk be diversified away by investing in both Shangri La and Mercury Industries 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 Shangri La and Mercury Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shangri La Hotels and Mercury Industries Bhd, you can compare the effects of market volatilities on Shangri La and Mercury Industries 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 Shangri La with a short position of Mercury Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shangri La and Mercury Industries.
Diversification Opportunities for Shangri La and Mercury Industries
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Shangri and Mercury is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Shangri La Hotels and Mercury Industries Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury Industries Bhd and Shangri La 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 Shangri La Hotels are associated (or correlated) with Mercury Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury Industries Bhd has no effect on the direction of Shangri La i.e., Shangri La and Mercury Industries go up and down completely randomly.
Pair Corralation between Shangri La and Mercury Industries
Assuming the 90 days trading horizon Shangri La is expected to generate 7.89 times less return on investment than Mercury Industries. But when comparing it to its historical volatility, Shangri La Hotels is 1.33 times less risky than Mercury Industries. It trades about 0.05 of its potential returns per unit of risk. Mercury Industries Bhd is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 91.00 in Mercury Industries Bhd on October 20, 2024 and sell it today you would earn a total of 8.00 from holding Mercury Industries Bhd or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shangri La Hotels vs. Mercury Industries Bhd
Performance |
| Timeline |
| Shangri La Hotels |
| Mercury Industries Bhd |
Shangri La and Mercury Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shangri La and Mercury Industries
The main advantage of trading using opposite Shangri La and Mercury Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shangri La position performs unexpectedly, Mercury Industries 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 Mercury Industries will offset losses from the drop in Mercury Industries' long position.| Shangri La vs. Homeritz Bhd | Shangri La vs. Media Prima Bhd | Shangri La vs. Binasat Communications Bhd | Shangri La vs. Mycron Steel Bhd |
| Mercury Industries vs. Tex Cycle Technology | Mercury Industries vs. Binasat Communications Bhd | Mercury Industries vs. Magni Tech Industries | Mercury Industries vs. MI Technovation Bhd |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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