Correlation Between Sporton International and Mercuries Life
Can any of the company-specific risk be diversified away by investing in both Sporton International 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 Sporton International and Mercuries Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sporton International and Mercuries Life Insurance, you can compare the effects of market volatilities on Sporton International 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 Sporton International with a short position of Mercuries Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sporton International and Mercuries Life.
Diversification Opportunities for Sporton International and Mercuries Life
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sporton and Mercuries is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sporton International 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 Sporton International 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 Sporton International 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 Sporton International i.e., Sporton International and Mercuries Life go up and down completely randomly.
Pair Corralation between Sporton International and Mercuries Life
Assuming the 90 days trading horizon Sporton International is expected to under-perform the Mercuries Life. But the stock apears to be less risky and, when comparing its historical volatility, Sporton International is 1.28 times less risky than Mercuries Life. The stock trades about -0.06 of its potential returns per unit of risk. The Mercuries Life Insurance is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 581.00 in Mercuries Life Insurance on September 3, 2024 and sell it today you would earn a total of 79.00 from holding Mercuries Life Insurance or generate 13.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sporton International vs. Mercuries Life Insurance
Performance |
| Timeline |
| Sporton International |
| Mercuries Life Insurance |
Sporton International and Mercuries Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sporton International and Mercuries Life
The main advantage of trading using opposite Sporton International and Mercuries Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sporton International 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.The idea behind Sporton International and Mercuries Life Insurance pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Mercuries Life vs. Central Reinsurance Corp | Mercuries Life vs. Huaku Development Co | Mercuries Life vs. Chailease Holding Co | Mercuries Life vs. CTBC 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |