Correlation Between Chung Lien and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Chung Lien and Mercuries Life 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 Chung Lien and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chung Lien Transportation and Mercuries Life Insurance, you can compare the effects of market volatilities on Chung Lien and Mercuries Life 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 Chung Lien with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chung Lien and Mercuries Life.
Diversification Opportunities for Chung Lien and Mercuries Life
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chung and Mercuries is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Chung Lien Transportation and Mercuries Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercuries Life Insurance and Chung Lien 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 Chung Lien Transportation are associated (or correlated) with Mercuries Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercuries Life Insurance has no effect on the direction of Chung Lien i.e., Chung Lien and Mercuries Life go up and down completely randomly.
Pair Corralation between Chung Lien and Mercuries Life
Assuming the 90 days trading horizon Chung Lien Transportation is expected to generate 0.42 times more return on investment than Mercuries Life. However, Chung Lien Transportation is 2.38 times less risky than Mercuries Life. It trades about 0.0 of its potential returns per unit of risk. Mercuries Life Insurance is currently generating about -0.15 per unit of risk. If you would invest 4,235 in Chung Lien Transportation on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Chung Lien Transportation or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chung Lien Transportation vs. Mercuries Life Insurance
Performance |
| Timeline |
| Chung Lien Transportation |
| Mercuries Life Insurance |
Chung Lien and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chung Lien and Mercuries Life
The main advantage of trading using opposite Chung Lien and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chung Lien position performs unexpectedly, Mercuries Life 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 Mercuries Life will offset losses from the drop in Mercuries Life's long position.| Chung Lien vs. ADLINK Technology | Chung Lien vs. Chicony Power Technology | Chung Lien vs. Easywell Biomedicals | Chung Lien vs. Ching Feng Home |
| Mercuries Life vs. Central Reinsurance Corp | Mercuries Life vs. Huaku Development Co | Mercuries Life vs. Fubon Financial Holding |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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