Correlation Between PIE Industrial and Mercury Industries
Can any of the company-specific risk be diversified away by investing in both PIE Industrial 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 PIE Industrial and Mercury Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PIE Industrial Bhd and Mercury Industries Bhd, you can compare the effects of market volatilities on PIE Industrial 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 PIE Industrial with a short position of Mercury Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of PIE Industrial and Mercury Industries.
Diversification Opportunities for PIE Industrial and Mercury Industries
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PIE and Mercury is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding PIE Industrial 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 PIE Industrial 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 PIE Industrial 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 PIE Industrial i.e., PIE Industrial and Mercury Industries go up and down completely randomly.
Pair Corralation between PIE Industrial and Mercury Industries
Assuming the 90 days trading horizon PIE Industrial Bhd is expected to generate 1.07 times more return on investment than Mercury Industries. However, PIE Industrial is 1.07 times more volatile than Mercury Industries Bhd. It trades about 0.21 of its potential returns per unit of risk. Mercury Industries Bhd is currently generating about -0.19 per unit of risk. If you would invest 521.00 in PIE Industrial Bhd on August 31, 2024 and sell it today you would earn a total of 59.00 from holding PIE Industrial Bhd or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PIE Industrial Bhd vs. Mercury Industries Bhd
Performance |
| Timeline |
| PIE Industrial Bhd |
| Mercury Industries Bhd |
PIE Industrial and Mercury Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PIE Industrial and Mercury Industries
The main advantage of trading using opposite PIE Industrial and Mercury Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PIE Industrial 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.| PIE Industrial vs. Nova Wellness Group | PIE Industrial vs. Uchi Technologies Bhd | PIE Industrial vs. Sunway Construction Group | PIE Industrial vs. Tex Cycle Technology |
| Mercury Industries vs. YX Precious Metals | Mercury Industries vs. Kossan Rubber Industries | Mercury Industries vs. Binasat Communications Bhd | Mercury Industries vs. Aeon Credit Service |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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