Correlation Between Southern Steel and Mercury Industries
Can any of the company-specific risk be diversified away by investing in both Southern Steel 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 Southern Steel and Mercury Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Southern Steel Bhd and Mercury Industries Bhd, you can compare the effects of market volatilities on Southern Steel 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 Southern Steel with a short position of Mercury Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Southern Steel and Mercury Industries.
Diversification Opportunities for Southern Steel and Mercury Industries
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Southern and Mercury is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Southern Steel Bhd 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 Southern Steel 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 Southern Steel Bhd 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 Southern Steel i.e., Southern Steel and Mercury Industries go up and down completely randomly.
Pair Corralation between Southern Steel and Mercury Industries
Assuming the 90 days trading horizon Southern Steel Bhd is expected to under-perform the Mercury Industries. In addition to that, Southern Steel is 1.12 times more volatile than Mercury Industries Bhd. It trades about -0.06 of its total potential returns per unit of risk. Mercury Industries Bhd is currently generating about 0.23 per unit of volatility. If you would invest 91.00 in Mercury Industries Bhd on October 22, 2024 and sell it today you would earn a total of 6.00 from holding Mercury Industries Bhd or generate 6.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Southern Steel Bhd vs. Mercury Industries Bhd
Performance |
| Timeline |
| Southern Steel Bhd |
| Mercury Industries Bhd |
Southern Steel and Mercury Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Southern Steel and Mercury Industries
The main advantage of trading using opposite Southern Steel and Mercury Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Southern Steel 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.| Southern Steel vs. Supercomnet Technologies Bhd | Southern Steel vs. CPE Technology Berhad | Southern Steel vs. ES Ceramics Technology | Southern Steel vs. Greatech Technology Bhd |
| Mercury Industries vs. Steel Hawk Berhad | Mercury Industries vs. CPE Technology Berhad | Mercury Industries vs. ES Ceramics Technology | Mercury Industries vs. Southern Steel 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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