Correlation Between Mercury Industries and ES Ceramics
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and ES Ceramics 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 Mercury Industries and ES Ceramics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mercury Industries Bhd and ES Ceramics Technology, you can compare the effects of market volatilities on Mercury Industries and ES Ceramics 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 Mercury Industries with a short position of ES Ceramics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and ES Ceramics.
Diversification Opportunities for Mercury Industries and ES Ceramics
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mercury and 0100 is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and ES Ceramics Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ES Ceramics Technology and Mercury Industries 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 Mercury Industries Bhd are associated (or correlated) with ES Ceramics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ES Ceramics Technology has no effect on the direction of Mercury Industries i.e., Mercury Industries and ES Ceramics go up and down completely randomly.
Pair Corralation between Mercury Industries and ES Ceramics
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to generate 0.35 times more return on investment than ES Ceramics. However, Mercury Industries Bhd is 2.85 times less risky than ES Ceramics. It trades about 0.23 of its potential returns per unit of risk. ES Ceramics Technology is currently generating about -0.06 per unit of risk. If you would invest 91.00 in Mercury Industries Bhd on October 23, 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 |
Mercury Industries Bhd vs. ES Ceramics Technology
Performance |
| Timeline |
| Mercury Industries Bhd |
| ES Ceramics Technology |
Mercury Industries and ES Ceramics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and ES Ceramics
The main advantage of trading using opposite Mercury Industries and ES Ceramics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, ES Ceramics 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 ES Ceramics will offset losses from the drop in ES Ceramics' long position.| Mercury Industries vs. Press Metal Bhd | Mercury Industries vs. Choo Bee Metal | Mercury Industries vs. YX Precious Metals | Mercury Industries vs. ECM Libra Financial |
| ES Ceramics vs. YX Precious Metals | ES Ceramics vs. Melewar Industrial Group | ES Ceramics vs. Mercury Industries Bhd | ES Ceramics vs. Star Media 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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