Correlation Between Mercury Industries and YX Precious
Can any of the company-specific risk be diversified away by investing in both Mercury Industries and YX Precious 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 YX Precious 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 YX Precious Metals, you can compare the effects of market volatilities on Mercury Industries and YX Precious 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 YX Precious. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercury Industries and YX Precious.
Diversification Opportunities for Mercury Industries and YX Precious
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Mercury and 0250 is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mercury Industries Bhd and YX Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on YX Precious Metals 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 YX Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of YX Precious Metals has no effect on the direction of Mercury Industries i.e., Mercury Industries and YX Precious go up and down completely randomly.
Pair Corralation between Mercury Industries and YX Precious
Assuming the 90 days trading horizon Mercury Industries Bhd is expected to generate 1.94 times more return on investment than YX Precious. However, Mercury Industries is 1.94 times more volatile than YX Precious Metals. It trades about 0.02 of its potential returns per unit of risk. YX Precious Metals is currently generating about 0.01 per unit of risk. If you would invest 93.00 in Mercury Industries Bhd on August 25, 2024 and sell it today you would earn a total of 1.00 from holding Mercury Industries Bhd or generate 1.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mercury Industries Bhd vs. YX Precious Metals
Performance |
| Timeline |
| Mercury Industries Bhd |
| YX Precious Metals |
Mercury Industries and YX Precious Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercury Industries and YX Precious
The main advantage of trading using opposite Mercury Industries and YX Precious positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercury Industries position performs unexpectedly, YX Precious 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 YX Precious will offset losses from the drop in YX Precious' long position.The idea behind Mercury Industries Bhd and YX Precious Metals 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.| YX Precious vs. Malayan Banking Bhd | YX Precious vs. Public Bank Bhd | YX Precious vs. Petronas Chemicals Group | YX Precious vs. Tenaga Nasional 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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