Correlation Between Star Media and Mercury Industries
Can any of the company-specific risk be diversified away by investing in both Star Media 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 Star Media and Mercury Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Media Group and Mercury Industries Bhd, you can compare the effects of market volatilities on Star Media 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 Star Media with a short position of Mercury Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Media and Mercury Industries.
Diversification Opportunities for Star Media and Mercury Industries
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Star and Mercury is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Star Media Group 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 Star Media 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 Star Media Group 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 Star Media i.e., Star Media and Mercury Industries go up and down completely randomly.
Pair Corralation between Star Media and Mercury Industries
Assuming the 90 days trading horizon Star Media Group is expected to generate 0.98 times more return on investment than Mercury Industries. However, Star Media Group is 1.02 times less risky than Mercury Industries. It trades about 0.06 of its potential returns per unit of risk. Mercury Industries Bhd is currently generating about -0.13 per unit of risk. If you would invest 40.00 in Star Media Group on August 24, 2024 and sell it today you would earn a total of 1.00 from holding Star Media Group or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Star Media Group vs. Mercury Industries Bhd
Performance |
| Timeline |
| Star Media Group |
| Mercury Industries Bhd |
Star Media and Mercury Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Media and Mercury Industries
The main advantage of trading using opposite Star Media and Mercury Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Media 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.| Star Media vs. MClean Technologies Bhd | Star Media vs. MI Technovation Bhd | Star Media vs. Computer Forms Bhd | Star Media vs. PMB Technology Bhd |
| Mercury Industries vs. Cengild Medical Berhad | Mercury Industries vs. Apex Healthcare Bhd | Mercury Industries vs. Ho Hup Construction | Mercury Industries vs. Nova Wellness Group |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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